Friday, October 28, 2011

Charts

Click on Chart to Enlarge

These are the charts I wanted to show last night. The S&P 500 is at a conjunction of possible chart resistance. The 200 day SMA, the neck line of the head and shoulders, and a long term trendline not visible, are all right in the area of price right now. And there is a low-low = high-high time relationship occurring right now as well. That is a possible time window for reversal.
Click on Chart to Enlarge

I have never heard or seen anyone else talk about this concept, and I've noticed it more in individual stock price charts than in indexes, but at times I've seen this in indexes. Basically the idea is that often times the major gap up in a trend will occur at a 61.8% retracement of the high to low of that trend. So when a trend is developing and you get a big gap, you can drag your retracement tool until the 61.8% retracement is at the beginning of that gap, and it will give you an ideal target for the ending price level of that trend. There are two examples on this chart here: the May-Oct decline, and possibly the current explosive uptrend since Oct 4th.

I may give more detail on this later.

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