The State of the Trend

By: George Krum | Sun, May 18, 2014
Print Email

At the end of April we mentioned that although the trend of the SPX continues to be up, there's a major reason for concern considering the divergence between the SPX and the DJIA on the one hand, and the IWM on the other. This was perfectly highlighted last week when both the SPX and the DJIA registered new highs only to pull back and have the IWM test critical support level in the 107-108 zone two days in a row:

iShares Russell Daily Chart
Larger Image

The implications of this divergence are pretty straighforward. As long as the IWM manages to stay above that key support level, the SPX and the DJIA are likely to keep scoring new highs, with major resistance coming at 1950 for the SPX. A break below the 107 level for the IWM is likely to coincide with a break below support and bullish trendlines for the SPX, and signal a change in trend for that index as well:

S&P500 Weekly Chart
Larger Image

The outlook for gold and silver didn't change during that period. They both hover just barely above key support levels despite intensifying geopolitical tensions. Just like in April, we still cannot get bullish on gold until it breaks above the 50% retracement level:

SPDR Gold Trust Shares Weekly Chart
Larger Image



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.

Copyright © 2011-2017 George Krum

All Images, XHTML Renderings, and Source Code Copyright ©