Thursday, 15 September 2011

S&P 500 now looks like early 2008

The S&P 500 chart from mid 2010 through to the current time, looks to my eyes similar to the chart from mid 2006 to March 2008. Below is the chart for the earlier period, followed by the chart for the current period.

Might the similarity continue going forward? Nobody knows. Though certainly the similar charts suggest a similar progression of market psychology through the two periods.

Just in case the similarity does extend in to the future, here's a reminder of what happened in the 12 months after March 2008.

ASX 200 set to open higher

Daily candlestick chart shown below, including after hours trading, currently at 4083.5, up from Wednesday's close of 4006.

It has been a volatile 24 hours, but the daily chart puts that in perspective, with the 4 candlesticks representing this week's trade showing broadly sideways movement since Monday's open. The trend at this time frame is down, meaning any surprises in price action will likely be to the downside.

Gold still trending up

Daily candlestick chart shown below.

The trend line was tested earlier in the week. The upwards bounce from the line has been weak, so a move under the line would not be a surprise. I'd be watchful for such a break to be false or short lived.

S&P 500 false trend line break

Daily candlestick chart shown below.

The S&P 500 rallied last night and broke through the trend line for a period, but at the end of New York trade, had returned to the trend channel. The pattern since the August low looks corrective to me, indicating that new lows lie ahead, regardless of whether the market gathers strength in coming hours and de-falsifies the false trend line break.