SPX: The Trend
Updated
A simple analysis is a good analysis.
In this short and simple idea, I will do some rudimentary trend analysis in SPX.
Most importantly, the behavior the famous index had, when it followed and violated long-term trends.
For each chart, I will take a step back in time and attempt to get into the mind of the traders that came before us.
Trends will be defined from the support level.
From 1871 to 1927, a total of 56 years, SPX price remained in a very stable channel. In 1927 the bubble that had already formed broke to the upside, which burst leading to the Great Depression.
Moving swiftly to 1956, by now many believed that another bubble formed and that the US economy would relieve The Great Depression. Contrary to many beliefs, this big event never came. Instead, the stock market soared.
In the years leading up to stagflation, a new trend took shape. This could be analyzed as a sloped Wyckoff Distribution of sorts. While this analysis I did is simplistic, it comes to prove the nature of trends. The difference when price follows a trend, and when it violates one.
During the Stagflation period, a classic reaccumulation took shape. After the SOS (Sign Of Supply), the trend changed decisively.
The chart before ended right before the Black Monday. After that a period of a ballistic equity market followed. The '80s and '90s might just be the most profitable period of the stock market. The ceiling was hit when the .com Bubble was peaking.
The 2000-2008 period suddenly makes sense. The 1987 peak and the 2000 peak are in significant points in this channel.
The 2008 peak is in a crossroad of points.
The 2009 bottom seems like an outlier on my analyses. Price behavior in 2010, 2011 and 2018 confirm that the channel drawn is correct.
Today's support level suddenly makes sense!
Again, the 2018-2020 events suddenly make sense. A trend violation is a violation indeed. Failure to re-enter can cause panic.
In the end, recent price action seems to follow a simple, yet meaningful trendline. This line served as significant support. Who knows what the future holds for SPX...
Curiously, the 1000 Month Regression trend, pinpoints the same centerline as now. The point we are at now, is as average as it gets!
Tread lightly, for this is SPX.
-Father Akikostas
In this short and simple idea, I will do some rudimentary trend analysis in SPX.
Most importantly, the behavior the famous index had, when it followed and violated long-term trends.
For each chart, I will take a step back in time and attempt to get into the mind of the traders that came before us.
Trends will be defined from the support level.
From 1871 to 1927, a total of 56 years, SPX price remained in a very stable channel. In 1927 the bubble that had already formed broke to the upside, which burst leading to the Great Depression.
Moving swiftly to 1956, by now many believed that another bubble formed and that the US economy would relieve The Great Depression. Contrary to many beliefs, this big event never came. Instead, the stock market soared.
In the years leading up to stagflation, a new trend took shape. This could be analyzed as a sloped Wyckoff Distribution of sorts. While this analysis I did is simplistic, it comes to prove the nature of trends. The difference when price follows a trend, and when it violates one.
During the Stagflation period, a classic reaccumulation took shape. After the SOS (Sign Of Supply), the trend changed decisively.
The chart before ended right before the Black Monday. After that a period of a ballistic equity market followed. The '80s and '90s might just be the most profitable period of the stock market. The ceiling was hit when the .com Bubble was peaking.
The 2000-2008 period suddenly makes sense. The 1987 peak and the 2000 peak are in significant points in this channel.
The 2008 peak is in a crossroad of points.
The 2009 bottom seems like an outlier on my analyses. Price behavior in 2010, 2011 and 2018 confirm that the channel drawn is correct.
Today's support level suddenly makes sense!
Again, the 2018-2020 events suddenly make sense. A trend violation is a violation indeed. Failure to re-enter can cause panic.
In the end, recent price action seems to follow a simple, yet meaningful trendline. This line served as significant support. Who knows what the future holds for SPX...
Curiously, the 1000 Month Regression trend, pinpoints the same centerline as now. The point we are at now, is as average as it gets!
Tread lightly, for this is SPX.
-Father Akikostas
Note
Final note:The channel middle is an average point. The most average of points. Today's price is as average as it gets.
To those bullish on SPX, I suggest to think twice. The "bottom is in" argument doesn't fit with hitting an EMA from above.
Historically, EMA doesn't pinpoint bottoms. It is just an average point in a trend.
Average is the point where the average trader buys into. Don't be average.
Note
(Grove Street) KST 4 LIFE
I wish I used this indicator a long time ago...
Note
An analyst must not follow a dogma, or be biased. We must let the charts speak by themselves.If we zoom in, we can better understand the recent ribbon retest.
A bear signal is printed. This tells us that price is bearishly reacting to the ribbon.
While price might appear to have found support, we must differentiate it from simple buyers' will.
For now, there is no visible support on the 1M timeframe.
P.S. The ribbon above the price is the invisible one. The one below is the visible one. In a sense, the ribbon below may call for fake support.
Note
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