by David G. Hawkins

Long Term – Monthly Bars Chart

The first chart here is the monthly bars chart.  In my last review of this timeframe chart, two months ago, I said, “So, on this timeframe, the volatility of the market is contained in this very wide trading range between S2 Cal. and R2.  Nothing more can be said in this timeframe until price eventually breaks out of this range.”  Now we see that price has broken out above both R2 and R1.  This bodes well for continued upward movement, going on to challenge the 2011 high.  Looking at this chart more broadly, from the 2009 low we see that in 2011 we established both a higher high and a higher low, confirming that since March of 2009, price has been, and continues to be, in a long term uptrend.  If price goes on to break above the 2011 high, this will continue the uptrend.

Short Term – Daily Bars Chart

The second chart here is the daily bars chart, updated through yesterday.  There is a TopFinder (purple curve) running from the December 19th low, and it is essentially done now.  So, this accelerated sort term uptrend is over now, and we should expect at least some consolidation before price decides what new direction to go in.

Tweet This Post

by David G. Hawkins

The chart here is the intermediate term weekly bars chart.  In my mid December post (QV), I said that an overal uptrend was emerging from the fog, mainly because the chart was showing a higher high and a higher low.  Now we see that the market has come right up to the previous high, amidst a cluster of resistances.  So far, it has closed above “Left R1″ and Monthly R2.  It poked above the horizontal resistance marking the previous high, but retreated to close below it.  Not far above is Monthly R1.  So, I would say that price needs to break out above this cluster of resistance and close above Monthly R1 before we can be sure that an uptrend is still in progress.

Tweet This Post

by David G. Hawkins

The Year

One word describes how the S&P 500 ended – Flat.  It opened the year at 1257.62 and closed at 1257.60.  That’s quite a statistical oddity!  At the high of the year it was up 9% and at the low, down 15%, but ended flat.

Very Long Term – the quarterly bars chart

The chart here is the quarterly bars chart from the early 1980s.  Let’s talk through the major moves shown here.

•  The giant accelerated very long term uptrend powered by the baby boomers launched in mid 1982 and finally topped out in the first quarter of 2000.  The green support curve starts at the beginning of this uptrend, as does the TopFinder, TF1, which is fit to the 1998 pullback.  That uptrend was a 1,420% gain.

•  The tech bubble burst in 2000, resulting in a -50% hit, down to the end of 2002.

•  The recovery ran from the end of 2002 to the end of 2007, resulting in a 105% gain, topping out just about where it was at the tech boom peak in 2000.  The TopFinder TF2 tracked this accelerated uptrend perfectly.

•  The crash of the Great Recession took the market down 58%.  But in March of 2009 that crash came to a screeching halt and turned around exactly at the green support curve, one of those amazing performances by a Midas support curve.

•  The accelerated uptrend that started in March 2009 looked like it was going to be a repeat of the one that ran from 2002 to 2007, so I fit a TopFinder, TF3, to the pullback of Sept. 2010, as well as starting the S2 of that uptrend, the second thin green curve, from the same date.  However, the latest two price bars of this chart have clearly broken below S2, showing that this accelerated uptrend has ended.

Where do we go from here?  The only firm conclusion we can make is that we’re not having a strong uptrend up to the 2000 high.  It is possible that after this pullback of the last two quarters an uptrend could start.  But clearly, we’re in a different mode now from the two big cycles that started in 2000.

Looking at this chart from the mid 1990s to the present, we see that in March 2009 we had a lower low, and in June 2011 a lower high;  these two facts are an indication that the long term trend has turned down.

Overall, though, the most remarkable feature of this chart since the 1990s is the cycling – absolutely enormous price moves up and down, -50% and +100%, several times.  We’re in a huge trading range defined at the top by the peak in 2000 and at the bottom by the S curve launched from mid 1982.

Since price is cycling, oscillators are appropriate to employ.  My two favorite are the RSI (top pane) and the MACD (bottom pane).  Quite remarkably, both are showing strong negative divergences as indicated by the downward slopes of those two red lines.  These are implying future downward price movement, consistent with the fact that we’ve experienced a lower low and a lower high.

My conclusion:  We’ve been in a huge cycling range for the last 12 years.  The current indications are somewhat negative for the breakout from this range.  If that does happen, it would be dire indeed for both the market and the economy as a whole, since that would put the S&P below 700.  I think that, even before we got that low, the Federal Reserve would step in with a new round of quantitative easing, QE3, which would reverse the market’s decline and set us off on a major new uptrend.

Tweet This Post

by David G. Hawkins

In this mid-month review, I focus on the weekly and daily bars charts.  My next post, at the end of this month, will be at the end of both the quarter and the year, so then I’ll review the monthly and quarterly bars charts.

Intermediate Term – Weekly Bars Chart

The first chart here is the weekly bars chart.  In my last post, I observed that extreme market volatility was scrambling the charts, making it difficult to identify any trends.  But now, I think I’m beginning to see some hints that trending is starting to emerge from the fog.  The market is still being confined between Left R1 and Left S1, as described in my last post, but look at what’s been happening over the last two months; we’ve seen a higher high (Oct. 28) and a higher low (Nov. 25), which is the traditional definition of an uptrend.  For confirmation, we’ll need to see the next high be above Left R1.  If that happens, we’ll be in a strong bull market in this timeframe.

Short Term – Daily Bars Chart

The second chart here is the daily bars chart.  Although the downward pressure from Price Projection has ended (see blue bars and last post), the market did sell off over the last two weeks.  However, in the last three days, it found firm support at the bolded S1 that was launched at the beginning of October.  And just yesterday, price started to lift from that support.  If this continues, we will have established a higher low, and thus may be starting an uptrend.  Overall, though, the appearance of this chart is still rather chaotic, still “in the fog”, so to speak.

Tweet This Post

by David G. Hawkins

This is my month-end review of the S&P 500, where I analyze the monthly bars chart, as well as the weekly and daily ones.

Over the last few months, the turmoil in the Eurozone, along with occasional economic news in the U. S., both positive and negative, have roiled the markets with unusually heavy volatility.  As this goes on, the volatility, which starts out being evident on the daily bars chart, percolates up into the longer timeframes, becoming noticeable on the weekly and now even the monthly bar charts as shown below here.  (At the end of this month, which will be the end of the quarter, I’ll show the quarterly bars chart, and then we’ll see if volatility has gotten that far up, or whether some inference of very long term trend may still be visible there.)  Under these conditions, it has become meaningless to try to infer direction of the market based on current charts, so I will no longer even try to do that until volatility calms down and the fog clears.

Under these circumstances, what if anything can Midas analysis do for us?  Remarkably, what is still visible amidst all this chaos, is that when the market spikes and abruptly turns around, as it has been doing all too often these days and weeks and months, we can still identify the Midas S/R levels at which these turns take place.  We can’t predict in advance at which level the turn will happen, but price does pick out one of these levels for its turn virtually every time.  Ahead of time, we try to populate our charts with these levels, both above and below the current price, so we can see which one price chooses for its turn.  Sometimes, though, it takes some back-analysis after a turn to identify the curve at which it happened.  This is the spirit in which I am providing the analyses below here.

Longe Term – monthly bars chart

The first chart here is the monthly bars chart updated through the end of November.  Comparing this to the chart I showed at the end of last month, you’ll see that I’ve done a calibration of the S2 curve (bold green), which I should’ve done back then, now calling it S2 Cal. The calibration is done at the July 2010 low, as marked by the little green arrow.  (The procedure for calibrating a Midas S/R curve is so important that I devoted a whole chapter to it in our book, q.v.)  This means that, going forward from July 2010, this curve is very significant.  Now we see that last month’s price bar only slightly perforated this curve before jumping up sharply.  So, I think it’s valid to observe that this curve did provide support last month.

Now, look at the downturn that started at the peak last May.  I’ve launched R1 from that point.  Two months later, there was a small pullback in price, so I’ve started R2 from that point, and we see that R2 perfectly captured (resisted) the top of October’s bar.  November was fully contained within October’s range.  So, on this timeframe, the volatility of the market is contained in this very wide trading range between S2 Cal. and R2.  Nothing more can be said in this timeframe until price eventually breaks out of this range.

Intermediate Term – weekly bars chart

The second chart here is the weekly bars chart, updated thru yesterday.  To try to get some clarity around the volatility here, I’ve applied a technique that I describe in our book in the section called, “Special Starting Points – Left Side”, q.v.  (p. 50).  This produces the two bold curves here, “Left R1″ and “Left S1″.  So far, these two curves are containing November’s volatility.

Short Term – daily bars chart

The last chart here is the daily bars chart, updated thru yesterday.  We see that the volatility of the last few weeks is being contained by R1 and the level of the “Left S1″ curve from the weekly bars chart. The blue bars and dashed vertical line illustrate the application of a technique developed by Richard W. Arms Jr. called “Price Projection”, which I describe at length in our book in the first part of chapter 7, q.v.  On our daily bars chart here, it is showing that, starting Nov. 8, there is downward pressure on price, which won’t be relieved until cumulative volume (horizontal motion) reaches the dashed vertical line.

Tweet This Post

by David G. Hawkins

Although the middle of the month isn’t for two more days, I’m doing this post now so that it is at the end of a week and the weekly bars chart will have a complete bar for its most recent bar.

Short Term – Daily Bars Chart

The first chart here is the daily bars chart.  In my last post I noted that this chart was showing a robust uptrend, with a TopFinder that was about 3/4 done.  We see here that that TF has completed, and indeed the uptrend itself topped out two weeks earlier.  Price then fell back, but found quite remarkable support at the R1 curve.  Here is another one of these awe-inspiring performances by a Midas curve.  In the midst of all the volatility in the market, price came down to and smartly bounce up off this well established curve, and has remained above it.  Price is also breaking the resistance launched from the top of this last trend, so, even though price is in what looks like a sloppy sideways consolidation, by holding support and breaking resistance, it’s giving some indication that the follow-on move will probably be to the up side.

Intermediate Term – Weekly Bars Chart

The second chart here is the weekly bars chart.  In my last post, I noted that price was in a strong new uptrend.  Now we see that over the last two weeks there was a minor pullback, so I’ve fitted a TopFinder to that pullback, and it’s currently 63.5% done, with its projected end at the horizontal location of the dashed vertical purple line.

Overall, even though the ongoing European financial crises are daily roiling the market, we see that Midas analysis continues to give meaningful tracking information to what’s going on.

Tweet This Post

by David G. Hawkins

Intermediate Term – The Weekly Bars Chart

The first chart here is the update of the chart in my last post, expanded.  In that last post two weeks ago, it was quite unclear to me what was happening.  But now we can see that price broke out from its consolidation very strongly to the upside, blasting right through three significant resistance levels.  Now it’s clear that a very strong uptrend started in early October with the bounce up from the old S1 level.  We can get a more detailed look at this uptrend on the next chart.

Short Term – Daily Bars Chart

Here we see clearly the robust uptrend we’re in on this timeframe, which started on Oct. 4th with the bounce off of Weekly S1.  There was a minor pullback on Oct. 20th, and I have fit a TopFinder to that pullback which is now 3/4 done, projected to end at the horizontal location of the dashed vertical purple line.

Long Term – Monthly Bars Chart

The last chart here is the monthly bars chart.  The size of October’s candle shows that volatility has really increased.  However, even though this is a tall white candle, it doesn’t change the observation that, on this timeframe, the market is still in a downtrend that started at the end of May.  Price is still holding below resistance while starting to break supports, and that’s the Midas definition of a downtrend.

Tweet This Post