Friday, 9 November 2012

S&P 500 threatening to break lower from down trend channel (updated with log scale chart)

The S&P 500 declined sharply last night, and is currently testing the lower line of the down trend channel formed around market action from the recent decline. A push lower from the trend channel would see the lower down trend line act as overhead resistance, applying pressure for the decline to accelerate. Ominously, the market pushed easily downward through the 13 month old up trend line formed from the late 2011 and mid 2012 lows.


Post updated with the following log scale chart. The above chart is arithmetic. There are no hard and fast rules about whether to use log scale or arithmetic charts, but when drawing trend lines it can make a difference. Whatever fits best, is best, and you only see that by trying both. I plead guilty to not trying log scale on this market for some time, so only now have I discovered that it is a better fit than arithmetic scale for recent market action.


DAX double trend line test (updated with log scale chart)



Post updated with the following log scale chart. The above chart is arithmetic. There are no hard and fast rules about whether to use log scale or arithmetic charts, but when drawing trend lines it can make a difference. Whatever fits best, is best, and you only see that by trying both. I plead guilty to not trying log scale on this market for some time, so only now have I discovered that it is a better fit than arithmetic scale for recent market action.