S&P500 Trendlines Extended
- Posted by JC Parets
- on January 10th, 2012
I was taught early in my career not to disregard my trendlines once support (or resistance) is broken. More often than not, these extended trendlines come back into play at some point in the future.
Now remember, we like to draw our trendlines with crayons and not sharp pencils, so we use this strategy to find potential ‘areas’ of support or resistance. This is a logarithmic chart of the S&P500 with two former trendlines that I extended:
And here is a closer look:
The intermediate-term red uptrendline matches up the 2010 peaks with the 2011 troughs. It was finally penetrated around the holidays after failing at every attempt throughout the Fall.
The Longer-term blue trend-line takes us from the 2009 July lows, up through the 2010 summer lows where the market found support in June and then again in August. This trendline turned into key resistance this August and is coming into play once again today.
These trendlines are supposed to be drawn with crayons, and theoretically should be a little bit thicker, but I think the charts still get the point across.
Remember to extend your trendlines.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
- IBTimes Interview: Underneath The Surface
- Taking Advance/Decline Line A Step Further
- What To Get Your Chartist For The Holidays
- Weekends With Allstar and Pearlman
- Why Is It Always About What You’re Buying?
- Video: JC Parets Presents At Duke University
- The Three C’s of December Seasonality
- Investment Managers Are Leveraged Long
- Tom Fitzpatrick in NYC December 16th
- Weekends With Phil Pearlman & JC Parets
Archive by Year