The State of the Trend

By: George Krum | Sun, Sep 15, 2013
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The war on Syria relief rally brought the SPX back within the congestion zone where it was trading in July and August.

SPX Chart
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By doing this, SPX has closely followed the seasonal pattern for the year:

SPX Chart 2

There are, however, certain differences between then and now: in July/August the weekly market breadth indicator had peaked and was rolling over; now, it is just turning up from oversold levels and is reaching for the highs of its range:

SPX Chart 3
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Looking at the seasonal pattern and taking into consideration market breadth, our targets and resistance levels, we doubt the SPX has enough left in the tank for a clean break above the congestion zone.

In July/August the Qs were in a congestion zone of their own. Now they have broken above that range, and have made new highs:

SPX Chart 4
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Currently, they are being held back in part by AAPL, which has broken below the upward sloping daily channel, but has found support at one of several support levels below:

SPX Chart 5
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A bounce/consolidation at these levels could provide enough impetus to propell the Qs to our monthly target, which is close by:

SPX Chart 6
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Switching over to gold and silver, we note that both metals remain under pressure. The much anticipated bounce in July failed to produce a swing high.

While gold is finding support at the 50% retracement level of the 2008 - 2011 upswing:

Gold Chart
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Silver hasn't been able to overcome even the 38.2% retracement, but instead, has found support at the 2008 highs:

Silver Chart
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A failure of both metals to bounce from current technical support levels will be a strong indication that the correction, which started in 2011, hasn't run its course yet.



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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