A more detailed explanation of the S&P Price Channel Indicator with a complete 45-year history can be found here.
It is interesting to note there is a significant downward movement in the price channel from mid-September to the end of October. While the S&P index is currently fairly priced, the looming drop in the price channel may potentially indicate higher volatility in October.
The price channel is currently 2370-2870, and the S&P 500 closed September at 2519.36, near the middle of the range but with the price channel falling.
The price channel indicates whether the index is overpriced or underpriced with respect to (delayed) measurements of financial capital flowing into the economy. The price channel for the past 24 years is shown below.
Because the indicator is based on delayed measurements, future values for the price-channel can be calculated from existing data by estimating the dividend yield of the S&P 500 (approx 1.9%).
Please note the actual value of the S&P 500 index is determined by market participants, and is often outside the indicated channel. The price channel does not predict future values of the index. It merely indicates the price levels that would be supported by financial capital that has been raised in the credit markets.