Tuesday, February 19, 2008

The Three Year S&P 500 US Stock Market Uptrend is Over

The Three Year (or more) S&P 500 US Stock Market Uptrend is Over.

In the chart above, we overlay a RAFF Regression Channel (the three parallel uptrending blue lines) over the S&P 500 from 2005 to the present. The Raff Regression Channel shows the general trading range of the S&P 500 and it shows a clear three year uptrend. However, it is clear that the S&P 500 has gone below the three year uptrending Raff Regression Channel showing that the uptrend is over.

Other Negatives:
  1. The 200 Day Moving Average has gone down below the 50 Day Moving Average (The "Death Cross").
  2. The S&P 500 is below both the 50 day and 200 day moving average.
  3. The S&P 500 has gone below a three year trend line (the red line in the chart above)

Typically, what was once support now becomes resistance on the upside.

Re-Test 1270 Lows on S&P 500

Because V-shaped recoveries are not common, we continue to expect the S&P 500 to re-test the lows of 1270. The S&P 500 could bounce and possibly re-test a third time. Or, the S&P 500 could continue to breakdown.

We need time to determine whether we will have a sideways, but volatile trading range bound market, or whether we could establish a new downward trend or an uptrend after a lengthy bottoming process with enough successful re-tests.

Today's Chart of the S&P 500 with the Information Above

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