The inflation adjusted $SPX has held to its long term trendline during this entire run, however in December the trendline became broken, only to see an immediate snapback rally placing us immediately on top of the trendline again.
This snapback rally was met with resistance that has now sent us right on the verge of breaking the trendline again. If we fall below the trendline again, rather than the December breakdown being a "false breakdown" flashing a bullish signal for a move higher, the trendline will become resistance flashing a "double false breakdown" with a move below, move above, then immediate move below again.
At this point the trendline will become resistance and put pressure on the continuation of this massive bull run. This is not to say we cannot trade higher underneath the trendline, but looking at the 2000 and 2008 run, when this happens there's several months of sideways trading underneath the trendline, then lower highs and lower lows.
Traders should be cautious at this point and protect profits and keep sizeable cash positions for snapback rally opportunities in both directions. This year of volatility will present incredible wealth building opportunities for traders to do very well.
This snapback rally was met with resistance that has now sent us right on the verge of breaking the trendline again. If we fall below the trendline again, rather than the December breakdown being a "false breakdown" flashing a bullish signal for a move higher, the trendline will become resistance flashing a "double false breakdown" with a move below, move above, then immediate move below again.
At this point the trendline will become resistance and put pressure on the continuation of this massive bull run. This is not to say we cannot trade higher underneath the trendline, but looking at the 2000 and 2008 run, when this happens there's several months of sideways trading underneath the trendline, then lower highs and lower lows.
Traders should be cautious at this point and protect profits and keep sizeable cash positions for snapback rally opportunities in both directions. This year of volatility will present incredible wealth building opportunities for traders to do very well.