The bulls will be defending key support levels. Breach of these levels may lead to an acceleration of the correction. The MACD sell signal from 9/24-25 is still in force.
For the Qs, we have:
3 week low (also last week's low): 40.72
3 week net line sell signal: 40.46
August high: 40.18
50.0% retracement from 07 high: 40.06
September low: 39.02
For the SP500, we have:
August high: 1039.47
3 week low (also last week's low): 1019.95
3 week net line sell signal: 1018.67
38.2% retracement from 07 high: 1014.14
September low: 991.97
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5 comments:
Seemed to me like there was a lot of distribution today. Will be interesting to see if AA's earnings changes that picture tomorrow substantially.
Otherwise, i would be looking for a SIDEWAYS trading range for days then a FALSE upside break.
It certainly is beginning to look like that is a strong possibility. As long as the support levels hold, that is the most likely outcome. I think next week will be interesting.
Craig,
What is your viewpt on validity of broken trendlines ? Specifically, if clearly broken on log charts, but not on non-log charts ?
None less than Richard Arms' ($TRIN) view is the March uptrend was decisively broken (as it is on log SPX, NDX, DJTA) However, that is not the case on non-log charts.
Interestingly, also on the log charts we have come up from below to touch the underside of those broken trendlines.
I think log charts are useful at times, but usually on longer time frames. Personally, I don't think they are as meaningful on shorter time frames.
The reason is that the primary mover of the market is psychology and most market participants are not relating to the markets from the the point of view of relative change (log chart) but absolute change (arithmetic chart).
On the larger time frames the log chart does clear up distortions that exist beyond the perceptions of the shorter time frames.
So, to conclude, I don't think it means to much that the log based trendlines of this relatively short rally have been broken, but that is just my opinion.
re: log charts
There was a bullish developmnt anyway, or perhaps a false development, because prices reversed to close back above said "broken" uptrend lines.
I agree with your views about log vs arithmetic. Seven or 8 months is too short a timeframe to be substituting log charts for arithmetic. I was just surprised because i hadn't come across anyone other than Richard Arms claiming that the uptrend had been solidly broken.
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