The State of the Trend

By: George Krum | Sun, Dec 21, 2014
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With 2014 drawing to a close, it's time to look at the big picture one more time and find out where we stand from a long-term point of view.

We'll start first with an update of the SPX monthly chart we posted last December:

SPX Monthly Chart to December 2013

It clearly shows that the trend has not only remained intact, but is showing a willingness to accelerate to the upside. Whether such an acceleration is sustainable is a question that needs close monitoring in 2015.

If we stick to the monthly time frame, but look at it with a different set of TA tools, we notice that the index has been following the 2011 angle very closely, and so far hasn't shown any sign of deviation from that trend. Previous rallies have ended at the crossover of the two averages, currently pointing to 1900 (August 2014 low) as the danger zone:

SPX Monthly Chart

To gain a better historical perspective, we need to switch over to the DJIA index. In terms of DJIA history, the current rally is shaping up so far to be the third longest and ranks 5th in terms of percentage gains:

Dow Historical Rallies 1896-2014 Chart

Speaking of DJIA history, it should also be mentioned that for the last 120 years the ratio of bullish to bearish years ending in 5 is 11 : 1 in favor of the bulls (with 2005 being the one losing year when the index finished marginally (less than 1%) lower. To easily digest this information, and to make it easier to follow in 2015, we've isolated the bullish from the less bullish years to arrive at the following swing charts:

Very Bullish Swing Chart
Data courtesy of Gann 9

In summary, the trend for the DJIA and SPX remains strong and well within historical boundaries. The collapse in oil prices and simmering geopolitical tensions are building a formidable wall of worry which the markets have been climbing succesfully so far (with a little help from your friendly central banker). By avoiding panicking, keeping a clear and open mind, doing your own analysis, and monitoring a few simple TA tools and technical levels, you should be able to stay on the right side of the trade.

Less Bullish Swing Chart

Wishing you all a happy holiday season and a prosperous 2015!



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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