Tuesday, July 24, 2012

No more trend line guidance

The S&P 500 index has violated both of its converging medium-term trend lines, thus precluding any short-term forecast.

If you suspect as I do that the S&P 500 will top out around 1550 for a third time before plunging again, then any rally from this point would gain ~15% at best. Is it just me, or does that seem like a small reward given the downside risk of a collapsing global economy?

Saturday, July 14, 2012

Trend line collision imminent

A declining tops trend line (red) has defined a general decline in the S&P 500 since early April, while a rising channel pattern (blue and green lines) has been in place since late May. The peak on July 3rd (circled) confirmed both trends, but soon the S&P will have to violate at least one of the trends and thereby forecast either continued rallying or another downward leg.