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S&P 500 Mid Month Review

by David G. Hawkins

Short Term – Daily Bars Chart

In my last post here, regarding this chart, I said, “But yesterday, it came to a halt right at R1, with a rather long upper whisker on that candle.  This could well be indicating a pause, a minor pullback, in this uptrend.  If price does come down a bit in the next few days, I’d watch for support and a turnaround at either R3 or S2, or maybe even as low as S1.”  Well, price certainly did come down, and further than the three supports I mentioned.  It went down one more, close to the level of the S1 curve from the weekly bars chart.  And in the last four days price has turned around and is now strongly moving upwards.

Above the present value of price, there is R1 as well as five levels I’ve marked, copied over from curves on the weekly and monthly bars charts.  Any one of these could be the level of the next turn down.

Since early August, what we see on this chart is a succession of higher highs and higher lows, with large swings of price in between.  So, this is an uptrend from August, but not a strong one, and accompanied with large volatility.

Intermediate Term – Weekly Bars Chart

The second chart here is the weekly bars chart.  The uptrend that started with the dramatic bounce up from Old R4 in early August is continuing, holding comfortably above the new S1 curve.  But it’s certainly not a robust up trend, kind of meandering along, lacking conviction.  So, we must be ever on the alert for it to top out and turn down, which is why I’m careful to include the four curves above the current price, one S curve and three R curves, any one of which could well be the level of the end of this lack-luster up trend.  The trend could go even higher, up to that top red line segment, which is the level of the R curve from the monthly bars chart.

There’s another possibility for this lack-luster uptrend.  If it continues to bounce along above its S1 for a bit more, then this will qualify as a Foothill Pattern, which Paul Levine, the founder of the Midas Method, identified, and which I described in our book.  The Foothill Pattern is often the precursor to an explosive uptrend.  We should be on the alert for a one bar (one week) very strong up move that goes far above the current range of this up trend and breaks through at least one of the resistance levels I’ve marked on this chart.  That would be the entry signal to get on board a new, very strong up trend.

The lowest line segment on this chart, down at 952, marks the level of the newest S1 curve on the quarterly bars chart.  The end of this month will be the end of the third quarter, so I will spend considerable time in my next post exploring the quarterly bars chart.  Already I can see that it’s going to be telling us some very significant things about the long and very long term health of the stock market.