Stock Market Technical Analysis
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As we enter the new market week, the S&P finds itself at three important junctures shown in the charts above.
- Chart 1: shows the S&P closed Friday exactly at the mid September all time high. Friday's closing also left the S&P up against the lower line of its most aggressive channel, the blue line channel above which is actually inside of the two-year red channel shown in chart 4. The slightest movement upward from here will put the S&P back into that super aggressive channel.
- Chart 2: shows that the S&P also has a massive expanding triangle pattern which indicates a big sustained move in one direction or the other is about to begin. The triangle measures nearly 200 S&P points tall at its current face. Technically, if it breaks to the upside the size of this pattern could take the S&P to the upper line of this blue channel over the next few weeks. Possibly, an early start to the traditional Santa rally. However, if the S&P fails to break above the upper triangle line it would technically be expected to fall the same 200 points back down to the lower line of the triangle.
- Chart 3: shows that the S&P closed Friday at the upper line of its midterm channel shown with green lines. The upper line of this channel has dictated the stop of all upward movement since late June. There could be substantial resistance here if we don't pop across it immediately.
- Chart 4: shows the S&P is already halfway up through its two-year bubble channel. Actually, there is a center 50% line right where the S&P closed Friday (not drawn in).
With the US midterm elections Tuesday, it's not likely we will see much change in the market until Wednesday morning. A lot of traders and investors will not even consider whether they will double up on their long position or flip and go short until they see the market's reaction to the midterm election outcome.
Trade well my friends
Alan
