Hi Club_Sharer, I think the big money always looks to the SPX imo, the DOW certainly is a good gage given it is made up of the 30 largest public companies in the US but I feel the S&P500 is a much better indicator of the bigger picture. Interesting to see the range the SPX is currently in on the monthly chart. It was definitely driven up a couple of weeks ago by the large instos in the US as the top trend line (chart below) was the target (even though there was no sustainable fundamental reason for this). After reaching the target it retreated fairly quickly and since we have seen it hit the bottom trend line and bounce off that.
The daily chart broke the ascending trend line support to the downside last Wednesday which I guess was the first sell signal. It then closed above the trend line on Thursday only to fall and close below again on Friday. Certainly volatile action which has unsurprisingly sent the VIX to a fairly high caution level imo.
The weekly chart held the trend line on Wednesday but closed underneath on Friday leaving only the monthly chart above the ascending trend line. Imo we are at a very important level and further weakness will see the monthly chart break the March trendline which would really spark a sell off.
On CNBC (last week) one of the traders on the floor kept referring to 1035 as a key support level (he must be a better chartist then me because I cant see it?), funny enough it finished Fridays trading at 1036 with an intraday low of 1033 so I guess he was right! lol, i guess thats why he is on the floor on the NYSE!
So to wrap up my ramblings I think the monthly is the what we need to keep an eye out for atm. It looks weak and dangerously poised but if it holds the trend line it may move higher(which would be a break out). If it closes below the trend line at the end of Nov then I think it may see levels around 875. Personally I think it will stay above and close the year out around 1080. Just my opinion.
SPX MONTHLY chart
SPX WEEKLY chart
SPX DAILY chart
