$SPX Daily

SP:SPX   S&P 500 Index
285 4 3
We've broken the 1 year trend line and closed below it on huge volume . This breakage needs at least one more day with the $SPX             closing below the trend line to validate the breakage. Some would give it two more days just to be sure. The implication is that once a channel line is broken then you measure the width of the channel and subtract that number from the point of failure to get a measured move. The width of the channel is about 120pts and the breakage occurred at 1760 so a measured move would take $SPX             down to the 1640 area. And this area around 1640 is important support as it turned the market in August and October of 2013. But first the breakage needs to be confirmed. If, by Wednesday or Thursday, $SPX             can get back inside the channel, then there's a chance this pull back is over and $SPX             may work its way back toward the top of the channel.

RSI is at 31 on the chart and usually you would see the markets turn when that happens, though not necessarily on the following day. Might need the RSI to drop below 30 before that happens.

Most of the breadth indicators that I follow gave extreme oversold readings yesterday and so I am looking for the markets to bounce hard for the next couple of days. However, there are certainly problems in Asia and elsewhere that may prevent this from happening. $DAX futures currently off 1% and they were off yesterday, as well. Margin calls may already be going out but if they haven't then any more down side is sure to trigger them and selling will beget selling. Be careful.

I'm using the wick which seems to be the difference and it produces a width of about 130. My 5 year mid-channel is about 1700. If a 1 year breach has occurred, then I would be looking for the 5 year mid-channel test soon. Is that a valid approach?
CurtisM SimGlenn
About the 1 year breach, first we need confirmation that this is a valid breach. We've had two closes below the lower channel line so far and a third and a fourth may be necessary or we move below the lower channel line by a percentage, say 1-3%, per John Murphy. If we get that confirmation tomorrow or Thursday, then, yes, we should be looking for a test mid-line support of the 5-year monthly chart, which, as you say, is somewhere around 1700 and close to the next Fib target.

Curtis - I'm not a channel expert by any means, but I chart the lower channel near 1740. This level held nicely yesterday and the current SPX level is well within trend after today. I suspect another several tests of this level may be in order before this correction winds down in the next several weeks. Yesterday seemed to be the perfect sell-off to exhaust sellers near-term along with the VIX spike above 21 we were looking for. So far, this correction is following the pattern of the three corrections in 2013 almost to script. Now you have me wondering if I mis-charted the 1 year. Regards - Glenn
CurtisM SimGlenn
I use the candle body not the wick, btw. Doing so from either the November 13' lows or the January 14' lows should get your lower channel line to come in somewhere close to 1770. If you go back further, then that lower line is going to change.

We now have a confirmed A-B-C structure in place as we closed below the B point of 1770, and I'm using the swing highs and lows for this. We've already completed the 618 extension to 1748 and the 1:1 extension takes us to 1718. This structure remains valid unless and until 1798 is taken out.

Thanks for your comments, GL
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out