NO. It's OUTSTANDING CHART READING. The obvious is not so obvious to 80% of traders (not on ET of course; we're all brilliant). Most fools are reading stochastics, RSI, MA's, & other bogus tools that filter price action artificially. This gentleman's charts look IDENTICAL TO MINE & I act on such S/R lines. Well done, sir. Well done indeed.
Not to mention the self fufilling prophecy feedback aspect of it that boosts its truth value even more. Looks like that 5-6 month long support becoming resistance for the short term will be coming into play.
OK, let's take out our monthly charts of the S&P 500 index. Tomorrow, 3/31/09, closes the monthly chart and the significant number I'll be watching is 790 -- the February 1997 monthly close -- which had acted as support in 2002, 2003 and again in November 2008. A close under 790 on the monthly chart tomorrow would confirm this area as new resistance and would give me a bearish bias for the near future. It would also reinforce the bearish double top formation. A close above 790, or better yet above 800 would continue my bias towards a bear market rally to the 200 day MA where I would re-evaluate. New support on the monthly chart seems to be the June 1996 monthly close of 670 and then 481 IF the market falls apart. Good luck. Also: The September 2002 low monthly close at 815 will also be significant resistance on the monthly chart.
In all honesty, I'm not sure what to think! On the one hand it closed above the 790 support but on the other hand it closed below 800. And how much of this week's trading was "window dressing"? 800 has been a very significant level for a long time. Also, the more I look at the monthly chart the more I see 815 as big resistance being the low monthly close of the previous bear market in 2002-03. As long as the S&P trades under the 815 level the double top formation remains confirmed and could bring on much lower prices. Watch the weekly chart close Friday and keep an eye on the 800 level. I am positioned well for the near future in the event of a rally or a selloff with option positions. It's only if the market stays right here for a while that my positions will suffer.
As the S&P approaches my second target here is an update of how I see the chart. Not a prediction, no opinions, just an observation of the monthly, weekly and daily charts. Monthly: Looking at the bottom of the 2002 bear market I see a sideways range prior to the following 2003-2007 bull market. The top of the range was at 954 (breakout point). This level may be acting as resistance now as traders anticipate another rangebound market. However, the 20 month MA is currently well above this level at 1131. Weekly: The weekly relative high prior to the current rally was at 943. This is (was) a resistance level. Friday's weekly close was slightly above that which is bullish. The next previous relative high is at 1007, which has been my second target (1000), especially since the 200 day showed little resistance. Daily: The daily chart consolidated sideways for the month of May and then moved up above that consolidation level and now for the past 10 sessions has consolidated even tighter!! This is usually a sign of an explosive move pending as bulls and bears fight for control. To use a trading cliche..... it's a coiled spring. The direction of the pending move is unknown, and anyone who says they know for sure is not a trader but a gambler. I am much more bearish than bullish but I am very aware that the market could explode to the upside no matter how irrational I might think that is. I also think that the test of the 1000 level is a possibility. So here is my current position. I initiated a short position in ESU09 on Friday and hedged it with long positions in June 97 and 96 SPY calls. This way, if the market explodes upward next week I am protected and walk away net even. If the market drops like a rock next week I have confirmation and will continue to build my short position. Best case scenario for me would be a blow off top next week followed by a huge drop. Then I could sell my SPY calls at SPY $100, then keep my short ES position. Worse case is the market trades to 960ish level and stays there which gives me a small loss on the ES position and my hedge expires worthless.
I noticed this the other day myself, not that it matters in my time frames, but look at the rejection at the highs and the support near the neckline. Haha I love TA.