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S&P 500 Mid Month Review

by David G. Hawkins

Since my last post here, the market has decisively turned down on both the short and intermediate terms. So in this post, I'm setting up the support ladders under the current price on both the daily bars (short term) and weekly bars (intermediate term) charts, and also showing the Arms Price Projection for this down trend.

The first chart here is the weekly bars chart. We see that price has come down through S4 (not labeled), S3, and is in the process of breaking S2; this latest price bar is incomplete as I'm showing this as of yesterday. The breakdown through S3 was the definitive event that establishes that we're now in a new downtrend. Below S2 is the ladder of support, defined by the labeled S curves, one of which is copied from the monthly bars chart.

The second chart here is the daily bars chart updated through yesterday, Tuesday May 15th. The levels of the support ladder curves from the weekly bars chart are copied here. As this downtrend unfolds, we should watch to see if there comes a turnaround in price at one of these ladder levels.

The red curve is the primary resistance curve, R1, for this downtrend. So far, it's still early in the trend and there has been now pull-up in price that may test R1. If the first pull-up doesn't come close to R1 before turning down again, then that will be the indication that this is an accelerated downtrend and at that point we can fit a BottomFinder to this downtrend - but not yet.

The lower blue bar identifies the consolidation top that preceded this new downtrend. I've applied Arms's Price Projection technique here, about which I blogged in detail a few months ago. It defines the region into the cum vol future during which there will be significant downward pressure on price. That pressure will end at the cum vol indicated by the horizontal position of the dotted blue vertical line.

For now, all we can do is sit back and watch this downtrend develop.