The S&P 500 (SPX) Chart Analysis (Daily)
Unitl Thursday, the consolidation pattern remained inside of the uptrend channel from Y 1992, but then it started to trade outside of the lower channel line (dashed line).
Friday made a new high, a new trend line has been drawn.
If this is a break-out, there should be immediate acceleration out of the congestion pattern and through the blue dashed line which has been providing resistance, so far.
If it’s a false break-out, which may very well be the case because we fell back inside the consolidation pattern by the close it could generate some selling, breaking the trend line and driving prices one more time to the bottom of the range and perhaps beyond.
The fact that the index has held up so well is an indication that there is no heavy liquidation taking place and, with the pattern which formed at 1810 projecting higher prices, the odds strongly favor an eventual resumption of the uptrend soon.
The US jobs report due Friday may be the logical catalyst to move SPX higher (or lower).
Another reason to think this move may happen shortly is that the 3 oscillators are beginning to show signs of turning up. This should alert traders that something is about to happen.
The hourly, last week prices shifted from the blue deceleration channel to the red corrective channel which delineates a very shallow decline.
As SPX neared its uptrend channel line from 1992, this channel line was actually penetrated on the daily, prices began to find support, attracting enough buyers to push prices outside of the red channel. But the move ran out of gas early Friday, ending the day slightly under the channel line.
As an “early bird” indicator, the SRSI gave a buy signal, but by the end of the day it had already made a Bearish Cross, although retaining its uptrend.
It is now obvious that more information to decide what will happens next.
Either the S&P 500 continues North, or selling breaks out of the channel line, perhaps dropping as low as 2155 before reversing and starting an uptrend again.