Saturday, 22 September 2012

S&P 500 could rally for several more months, if action since early 2009 is any guide

The S&P 500 has broken upwards through the channel that contained prices from mid 2009 to now, as illustrated on the weekly chart. How much longer could this market rally? Several more months I think, with the proviso that last week's low at the trend line retest is key to any immediate rally. The MACDH on the weekly chart has been positive since late July. The previous two periods of positive MACDH, beginning 2010 and 2011, both lasted six months.The next earlier period of postitive MACDH, beginning 2009, lasted much longer than six months. If the current positive period lasts six months, MACDH and the market will not turn lower til late January or so.

Zooming in to the daily chart to get a different perspective, we see the S&P 500 is currently channelling higher, as it has been for almost four months. The S&P likes to channel. Why? I've no idea. That's like asking why do trees have branches. That's their nature. Trend channels are part of the market's nature. Trend channels have been evident on charts for centuries. Think about it a little and you'll see that current beat up about high frequency trading changing the nature of the market is absolute nonsense, on anything other than very short term basis. Charts show the history of the markets in its purest form, and the patterns on those charts are the best exposition of the market's nature. The patterns evident since market history began are all still there today on daily and weekly and monthly charts, even down to hourly and less. The nature of the markets has not changed. The market's nature is a direct reflection of human herd behaviour, as it has always been, and that herd behaviour will always leave familiar footprints on the charts. Who writes the programs? Humans! Who sets the rules? Humans! People like excuses for doing poorly in the markets, but never need to look any further than the mirror to find the true and sole determinant of their results.

ASX 200 stays above 2007 and 2011 highs trend line, but nearing potential resistance

Weekly chart, log scale, illustrates that the ASX 200 has pushed above the trend line drawn from the 2007 and 2011 highs but is nearing a potential resistance zone around 4450. If that level is cleared the market would have a shot at 5000 in the subsequent period.

The daily chart is a mess, or at least indecipherable to me, so I won't post it.

DAX riding trend line higher, but nearing potential resistance

Daily shows the trend line.

Weekly shows the resistance, from the 2011 highs.

AUD/USD pushing higher, mid September high and this week's low are key

Weekly shows the AUD/USD pushing higher, and testing the trend line drawn from the 2011 and 2012 highs. A move above the mid September high should open the way for further gains.

Daily chart suggests that a move below this week's low would weaken the odds of a push higher.

EUR/USD still in down trend channel

Gold nearing potential resistance, could be good news for those who want to buy in or buy more

Gold is nearing potential resistance at the late 2011 and early 2012 highs, and perhaps Gold will pull back from that zone. Though perhaps it won't! In any case, it is inevitable now that we will see a bullish cross by the 18 and 40 week moving averages. While past performance is no guarantee of future success, Gold's behaviour from 2009 through most of 2011 indicates that any retracement to the 18 can be a good long entry point.

Silver nearing potential resistance at late 2011 and early 2012 highs