I charted the S&P 500 after the markets closed on Friday, March 26, 2010 after the index closed at 1,166.59.
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The S&P 500 has been in rally mode since early February, but it may finally be time for the index to ease off of the gas some. SPX hasn’t closed below
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I charted the S&P 500 after the markets closed on Friday, March 26, 2010 after the index closed at 1,166.59.
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The S&P 500 has been in rally mode since early February, but it may finally be time for the index to ease off of the gas some. SPX hasn’t closed below its 10 day moving average since February 12th, but cracks are starting to show. Giving credence to that theory is the Williams %R indicator for the 14 day period and the longer trend line of higher lows that broke this week. The Williams %R is always one I highlight when it moves above oversold or below the overbought area. That happened this week for the 14 day indicator, but not yet for the 28 day indicator which could mean this breather in momentum doesn’t last, but I take it as a strong warning to watch the index for weakness.
Just as Williams %R doesn’t give a fully negative picture, but hints lower levels might be just around the corner, the 10 day moving average hasn’t broken on the close, but tested it more frequently this week. Even when the SPX didn’t fall below the 10 day moving average it hugged the line almost every day. Each day that the moving average moves higher the harder it is for the index to stay above it without better momentum at its back. The 20 day moving average could be a good area of support with it currently residing around 1150, the high from January.
Possibly the most concerning from this technical view is the trend line that started in early February and broke intraday a couple of weeks later and then held on through Wednesday of this week. Thursday is the first day it broke and closed below the trend line. Friday was a repeat that even used the same line as resistance for the high of the day. Another trend line (that might be more of a wish of a trend line) offered support before SPX recovered some by the end of the day. We’ll see fairly soon if this other line was worth drawing.
Keep watching these trend lines, moving averages and Williams %R and we should stay ahead of a bigger correction if it hits the S&P 500.
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