The State of the Trend

By: George Krum | Sun, Jun 23, 2013
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We've mentioned several times that putting the infinity of QE in doubt will make it harder and harder for the FED to keep all the plates spinning in the air. The true test of that assumption will come in the next several weeks. So far, as we concluded in our last article, the markets have been closely following their seasonal patterns. That was confirmed one more time as all the major indices declined sharply into the projected weakest summer time frame:

SPY Chart

The question now, however, is whether they will continue to do so and trade more or less in a trading range until the end of Summer, or continue their slide on fears that the FED will start tapering QE soon, that China liquidity is drying, and its economy is slowing down, etc.

Luckily, there's not much guess work involved. If the bulls manage to pull and keep the SPX above or close to the 2007 high, then chances are that the seasonal pattern is prevailing. Otherwise, a decline similar to previous declines from the top of the weekly channel points to support levels at 1566, 1536, 1466 and 1386:

S&P500 Weekly Chart
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George Krum

Author: George Krum

George Krum

George Krum is the author of the "CIT Dates" blog, and the following apps:

OddsTrader - combines the power of Hurst Channels with proper risk and position size management. For a web version see OT Signals below.

Gann 9 - the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world, and to build long-term forecasts and models.

OT Pairs - pairs trading, one of the most successful hedge fund trading strategies, is now available on your smart phone.

OT Pivots - combines the power of pivot lines with cycles to provide you with concise technical analysis and powerful trading signals.

OT Signals - a web app accessible from any browser, tablet or pc. It gives buy/sell/hold ratings for any instrument from around the world, and defines the trend and support/resistance levels.

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