We are now at an exquisitely important point in the market, as exemplified by the S&P 500 index, because price is up against multiple major resistance on all timeframes. This is something that is extremely rare and highly significant, so I’ll take the time here to clearly elucidate this in this blog post which is unusually long.  If you don’t want to read through this whole thing, here’s the short summary:  If price breaks up from here, we’re likely in for a major bull market on multiple timeframes; but if price breaks down, we’re probably starting a major bear market.

I’m showing four charts here, all updated through yesterday:  1)  Very Long Term – quarterly bars, 2) Long Term – monthly bars, 3) Intermediate term – weekly bars, and 4) Short Term – daily bars.  I’ll start this analysis with the very long term, then carry forward its significant resistance levels onto the next shorter term chart, and will continue that way through all of the charts.

Very Long Term – Quarterly Bars

The first chart here is the S&P 500 on quarterly bars from 1972, with price on a log scale, and the horizontal axis time based instead of my usual equivolume display.  Also, the S/R curves and the TopFinder are all calculated with the assumption that the volume is the same for all price bars.  The reason for doing this is too long and complex a subject to go into in this blog post; I devote an entire chapter to this in our forthcoming book.  For now, suffice it to say that for this timeframe, it works better this way.

Notice the two red R curves launched from the tops of the market peaks of 2000 and 2007.  They are now very close together, at 1251 and 1264, and price is very close to touching them at 1227.  So, price is encountering major resistance, meaning a break above these R curves would signify great strength and likely much higher prices.  But, a turndown from here would signify a new bear market on this timeframe.  Also, notice the upper and lower panes, where both the RSI and the MACD line are strongly diverging down from the price, implying future market weakness.

Long Term – Monthly Bars

The second chart here is the long term one with monthly bars, starting in 2002.   I’m returning now and on all subsequent charts here to equivolume charting with the Midas curves calculated with real real volume data, and price on a linear scale.  The two horizontal red lines mark the vertical levels of those two R curves on the very long term quarterly bars chart.

We see that price is now up into a cluster of three closely space resistance levels, the first being that of the Highest Resistance curve at 1217, the next being the horizontal level of the April high of 1220, and the third being the 61.8% Fibonacci retracement level at 1229.  Clearly, the Fib levels are important on this chart since the 38.2% level perfectly supported the July pullback whereas the Midas S2 curve did not.

Price is now into this cluster of resistance.  So we must say the same conclusion for this chart as we did for the very long term one:  ”a break above these R [levels] would signify great strength and likely much higher prices.  But, a turndown from here would signify a new bear market on this timeframe.”

Now, we’ll cary this cluster of R levels, along with the two R levels from the quarterly bars chart, over to the next shorter term chart.

Intermediate Term – Weekly Bars

The third chart here is of the intermediate term, with weekly price bars, starting in January of 2009.   Shown here are the five resistance levels that were identified on the longer term charts.  Obviously, the same conclusion applies to this chart as to the monthly bars chart.

Short Term – Daily Bars

We see here more clearly that price is right in the midst of that cluster of resistance levels, and yesterday started to turn down.  (So far today, Tuesday at 11:30 am, price is meandering around with little change.)

See my last several posts here for the discussion of the TopFinder on this chart.  Right now, it is 97% complete, with only a day or two more to go, so this short term uptrend is over.  This means we should expect at least a brief consolidation before price decides what to do next.

Obviously, the same conclusion applies to this chart as to the previous three.

Summary

See the first paragraph of this post.

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