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Chart 1
S&P 500 REMAINS ABOVE 200-DAY AVERAGE...The last message on
October 6 pointed out that both versions of the S&P 500 needed to remain
above major support lines. So far, they've been able to do that. The daily bars
in Chart 2 show the SPX having bounced off its 200-day moving average (red
arrow) and a rising trendline drawn under its October/March lows. Chart 3
gives a closer view of that test and shows the SPX meeting resistance at its
50-day average (blue arrow). The index also remains below a falling trendline
drawn over its July/September highs. Until those resistance lines are
overcome, the strength of the recent rebound will remain in doubt.
Chart 2
Chart 3
EQUAL WEIGHTED VERSION ALSO TESTS IMPORTANT SUPPORT...
Chart 4, which was included in the previous message, shows the S&P 500
Equal Weighted Index testing major support along its spring low. As
explained on October 6, the inability of the SPXEW to exceed its February
high in late July (red arrow) marked a top in both versions of the S&P 500 and
pushed both into important tests of support. That makes the test of the lower
(green) trendline by the Unweighted index important both for itself and the
S&P 500 itself. Both are likely to succeed or fail together.
Chart 4