Archive for December, 2009

This is an update to my Nov. 20th post, q.v.  For almost four weeks now, the situation hasn’t changed – prices holding just below resistance, still at the critical turning point.

The chart here is of the S&P 500 index, which is better behaved than the Dow.  The same comments apply here as to the Dow post on Nov. 20th.

Notice the green support curve, launched from the low of Aug. 23rd.  It has captured the pullbacks of Oct. 2nd and Nov. 6th, so is a very significant curve.  Together with the red resistance curve, these define a trading range, currently between 1044 and 1123.  As long as the index stays in this range, we know nothing new.  But, a breakout from this range will be very significant.  A breakout above will tell us that we’re not repeating the behavior of the 1930s, and probably the economy won’t be as bad going forward as it was back then.  But, a breakdown below this range will tell us that things are at least as bad as the 1930s.

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