Archive for May, 2011

by David G. Hawkins

Here at mid month I update the short term (daily bars) and intermediate term (weekly bars) charts.

Short Term

The first chart here is the daily bars chart updated through May 13th.  We see that a pullback started on May 3rd, and now has become a consolidation, bounded approximately by the new S1 and R1 curves.  If it breaks out to the downside, we have the ladder of support curves set up below the current price range, any one of which could stop a new decline.  It’s interesting to note that the S4 cal curve and the level of the weekly S3 curve (whose level is copied over here from the weekly bars chart) are now coalescing at about 1304, so that should be a very strong support level.

Intermediate Term

The second chart here is the weekly bars chart.  There was a minor pullback on the week of May 21st, so I’ve launched S4 from there.  On this update, I’m calling attention to the upper and lower panes on this chart which display the Money Flow Index (which really is the volume weighted RSI) and the Volume Weighted MACD because both of these are now showing strong negative divergences with price.  This indicates that this uptrend which started late last summer is now weakening behind the scenes.  Even though the TopFinder that is tracking this uptrend on this weekly bars chart is only about half done, I’m doubting if this uptrend will actually last that long.  See my May 1st post in which discusses this TopFinder vs. the one that is displaying on the monthly bars chart.  That monthly TF is now 71% done, and looks like it has only two or three more months to go.  With weakness now showing up on the weekly bars chart’s Money Flow Index and Volume Weighted MACD, it is more likely that the projection of only a small number of months to go is the more valid one.

Tweet This Post

by David G. Hawkins

This is my month end review of the S&P 500, where I update the daily bar, weekly bar and monthly bar charts.  I updated the daily and weekly bar charts in my mid month review on April 17th.

Short Term – Daily Bars Chart

The first chart here is the daily bars chart.  But first, please scroll down and see my April 17th chart & commentary.  There, since price bounced smartly off S1, I expected strong upward movement to follow, at least for several days.  However, on the very next day, Monday April 18th, Standard & Poors dropped a bomb on the market by downgrading U. S. debt with a negative outlook.  The stock market reacted sharply downward.  What’s fascinating to notice here on the updated chart is that price went down to the curve I’ve been calling “S4 cal”, which I’ve had on this chart for several moths, and bounced right up from it.  The low of that day, 1297.4, and the level of the curve, 1295.2, are so close, differing by only 0.8, that this support and bounce cannot be just happenstance; rather it’s a beautiful illustration of the power of the Midas method.

After the negativity of that Monday got absorbed by the market, prices went on to do what I had expected they were going to do, which is to move smartly up.  Indeed, this new uptrend has been almost a straight line.  Eventually, there will be some kind of pullback, but at this point there’s no indication of one.

Intermediate Term – Weekly Bars Chart

The second chart here is the update of the weekly bars chart.  We see that in the past two weeks, price has broken above R1, above the high of the Feb. 18th market peak, and has just poked and closed above the Fibonacci retracement level that we’ve been watching for quite some time.  So, this shows that the uptrend that started late last summer is forging ahead.  The TopFinder shows that this trend is now about 49% done in terms of cumulative volume.

Long Term – Monthly Bars Chart

The third chart here is the update of the monthly bars chart that I last showed here in my April 4th post.  On this update, I’ve added a new TopFinder, TF4, started from last summer’s beginning of the current uptrend.  TF4 joins the three other TopFinders and one BottomFinder shown on this chart, all of which beautifully nailed the ends of the accelerated trends they were following.  I’ve changed the display to EquiVolume from CandleVolume to more clearly illustrate the points to which these TFs and BF have been fit, shown by the small arrows.  My point here is that TopFinders and a BottomFinder have been very successful on this long term chart, which leads us to expect that this current unfinished TF4 will be equally successful.  TF4 is now 68% complete, with the horizontal location of its completion projected to occur at the dashed vertical purple line.   If average monthly trading volume continues as it has been, completion will come in three to four months from now.

If you again look at the weekly bars chart, the second chart here, you’ll see that its TopFinder is only 49% done, also starting last summer, which projects a completion many more months from now than the TF4 on the monthly bars chart does.  These would seem to be contradictory projections.  Actually, these two TFs don’t address exactly the same situation.  The monthly one starts from the low of last summer, which was in July, but the weekly one starts from the end of August.  The accelerated uptrend on the weekly bars chart is not the same uptrend that’s displaying on the monthly bars chart.  Also, I’ve found that a TF which is less than 50% done is not as reliable as one which is more mature.  Given the track record of TFs and BF on the monthly bars chart, I’m looking at that one to be the more reliable.

Tweet This Post