How’s The Long Term Health of The S&P 500 Looking?
- Posted by TheArmoTrader
- on August 22nd, 2013
Markets are near all-time highs yet we continue to constantly hear of “bubbles” popping or bearish patterns forming or of some fundamentally bad news. This is all fine and dandy but how’s the long term technical health of the S&P 500 actually looking?
Here’s a basic look. Some people like to get fancy, but as cliché as it sounds, I like to keep it simple (stupid). There are two things that stand out to me.
The most interest fact is that the S&P 500 is near all-time highs. Not only is it at all-time highs, but it has not closed below the breakout level of the double top at ~1550. Barring a major late August sell-off, on September 1, we will have had half a year (6 months) of consolidation above this level.
We still need a bit more time to work off some of the overboughtness (yes, I just made that word up) reading from the RSI (Not that we can’t rally with overbought readings…but I’m just looking at what would be the most healthy long-term). But I think another 2-3 months of closing above this level should do the trick which could set us up for a nice thanksgiving/christmas rally. I think this ‘breaking out and holding above’ fact is so simple, yet so important.
The 2nd most important thing is that the moving averages are trending up and are finally spaced from each other. This is what you want to see.
I know I will get some detractors mentioning volume, so let me address that. Yes, volume is not amazing. But who cares? Only prices pays. Volume is important but if you were worrying about volume for the past 5 years, you’d have missed the entire rally (if not, hurt shorting it).
$SPX – S&P 500 Monthly Chart
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
- This Chart Nearly Disproves The Myth Surrounding Unemployment Insurance
- A Modest Proposal For The Minimum Wage Debate
- What Exactly Is Economic Growth?
- Bonds Are Hanging On For Dear Life
- Should Bill Ackman Buy Back Into JCPenney?
- Silver Is Looking To Crash
- Was Good News Really Bad News?
- Is The US Headed Towards a Recession?
- Enjoying The Low Energy Prices?
- Is The Dollar Setting Up For a Massive Run?
- Don’t Buy This Market Breakout!
- Is Macy’s A Buy?
- One Undeniably Bullish Fact Of This Bull Market
- Why The Level Of Public Debt Doesn’t Matter
- No, Don’t Freak Over Treasury Bill Market