The State of the Trend

By: George Krum | Sat, May 28, 2011
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Last week the conclusion was that the market was in a sideways phase. That might not have been completely accurate, since the SP500 lost all of 2.17 points or 0.16%.

But let's check on the state of the trend now.

The March 2009 rally is intact, and is still tracking the 1994-2000 bull market rally rate of growth.

Trends Analysis
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The daily chart, however, continues to raise worries.

Trends Analysis
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The index broke briefly below monthly support, and finds itself at a critical juncture, backtesting the daily channel.

For the uptrend to continue, SPX needs to claw its way back within the channel. Failure to do so will indicate that the daily sideways/down phase will continue.

Since the Crash of '87, June has been the third weakest month of the year, measured by how many times the close was above the open (50%), and what the average gain was (-0.27%). The strongest day of the month has been June 1st, which closed positive 88.2% of the time, for an average gain of 0.53%. Overall, the daily up/down ratio for the whole month is 43%, and June sports 5 of the 25 weakest days of the year*.

I'll conclude, as usual, with the channel chart for near-term support/resistance levels and trend direction. And this time, I'll let you decide on the state of the trend.



* The complete monthly rankings table and trading day statistics for the whole year can be found in my book Trading the SP500.



George Krum

Author: George Krum

George Krum

George Krum is the author of the "CIT Dates" blog, and the following apps:

OddsTrader - combines the power of Hurst Channels with proper risk and position size management. For a web version see OT Signals below.

Gann 9 - the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world, and to build long-term forecasts and models.

OT Pairs - pairs trading, one of the most successful hedge fund trading strategies, is now available on your smart phone.

OT Pivots - combines the power of pivot lines with cycles to provide you with concise technical analysis and powerful trading signals.

OT Signals - a web app accessible from any browser, tablet or pc. It gives buy/sell/hold ratings for any instrument from around the world, and defines the trend and support/resistance levels.

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