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In technical analysis terms, the advance in the S&P since January was
the result of a break-out from a triangle (and resistance) in the
presence of a low ADX (14 on the 14-day). A low ADX indicates the
market has not been trending and may be ready to move. It does not tell
you which direction.
The June S&P is in a triangle consolidation again. The triangle's
resistance line can be drawn along the short-term tops of 4/6, 4/22,
5/4. The support line can be drawn under the short-term bottoms of 4/27
and 5/7. The 14-day ADX is falling fast (16 as of yesterday's close).
If the past is any indicator, this market may be ready for another nice
move once the triangle pattern is resolved. The entry signal would be a
close beyond either trendline (either > 1137 or < 1107). Those of you
who are more conservative may want to wait to enter until the highest
high or lowest low since 4/6 is taken out.
This is not meant to be a recommendation, just information. I am
attempting to attach a Metastock 6.5 chart to this email.
Bill Bancroft
Attachment Converted: "c:\eudora\attach\Sp.mwc"
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