Currently the S&P 500 is still maintaining its upward sloping path of rising prices within the trend channel that it established in 2009. It would have to fall to the 1085 area or so to violate the trend channel which would indicate a reversal.
The daily stochastics are very overbought right now as well as the weekly which just hit overbought. Of course stochastics can stay that way for prolonged periods of time and often do. Price is near the top of the current trend channel which is almost 1200.
Price on the weekly chart is being hit with a 200 week moving average and upward momentum has been more difficult the past week or two since that area has been touched.
On the monthly chart you can see a correction that lasted briefly 2 months and the uptrend continued. the monthly is currently looking as though it wants to break even higher although the daily appears less robust and overbought and the weekly chart is showing signs of congestion and slowing.
The monthly chart going back to 2002-2003 shows a somewhat similar setup on the charts as to what is occurring now. the correction was deeper into 2009 than the 2003 correction was but as it retraced its steps back up there was price congestion in the 1150 area that lasted for approximately 7 months before the trend continued its upward move.
The move up from the respective bottoms of 03 and 09 are very similar in strength and duration thus far. neither move had much of a retracement on the monthly chart for almost a year after their run ups began.
The current market could take a note from the 03 move up and take a bit of a breather and give it some time to consolidate. Investor’s need some consolidation to get used to the idea of higher prices and feel comfortable the market isn’t going to tank on them. according to some market watchers many retail investors have not reentered the market and may not after the 2007 meltdown.
The market melt down’s of 2000 and 2007 have made many investors nervous about putting their money on the line and enjoying the benefits of stock price appreciation. In looking at the market activity that has occurred in the last year since the market bottom in 2009 there has been significant upward movement in stock prices as a whole and plenty of wealth that was created.
The market appears as though on a long term basis that it wants to return to the 1500 area. During the last correction it took almost 5 years for that to occur. If the timing is similar we still have another 3-4 years to go before we would see those levels again. many things can and probably will occur to make sure it does not repeat it exactly as before.
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Review the S&P charts at our blog and you can see for yourself what the chart action looks like.