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Strategies & Market Trends : Point and Figure Charting

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To: Underexposed who wrote (32745)	1/31/2020 6:30:03 PM
From: Underexposed	4 Recommendations Read Replies (2) of 34818

Update on the state of the $SPX. As you have seen it has been quite volatile lately with some (misguidedly IMHO) thinking the last spike upwards meaning all is well and the Bullish run would continue. But this last week has shown that to be very much in doubt and to depend on a single up tick (no matter how big) is very foolish unless you are a day trader with the tools to take advantage of these events. Being such a day trader is a talent in itself.... there is a reason that 90% of new day traders lose their complete poke in the first year... it is hard work and takes a special set of tools to identify and take advantage of very tiny opportunities.... Tools that I as a long term trader could only imagine and frankly the amount of work and daily concentration required is too onerous for me :) Bull and bear runs are of concern to the mid and long term trader...not so much for the day trader as I have mentioned in another post here OK...after that sermon I will now examine the state of $SPX. I will use all my charts in this case. First the P&F and Trigger charts Notice I have eliminated that green box of support in the P&F Chart.... that was a phantom..... the real support was that diagonal support. But today that support was breached and now the diagonal has turned into a strong resistance. I drew a support line at 3225 but I doubt this will be anything substantial...3155, 3125 and 3090 should be more substantive those individually they are about the same medium strength...why? Because each has only one point of support. P&F charts for me are good for identifying macro support/resistances The diagonal support has 3 points of support (bottom of "O" columns) so this make this line much stronger than the others. The blue circle shows the column SMA's and the bullish blue one is starting to turn if it crosses the red line we would be full on bear...as shown in earlier portions of the chart IF the $SPX breaks these 3 support lines I drew.... well we ARE in for a long bearish correction....A return to a bull run in the near future is a remote possibility now My Trigger chart is much better at showing micro resistance/support levels. This is because a P&F chart would only show 1 or 2 changes in a day/week/month if there was little change outside its box size.... a Sharpchart would show the time period with a flat line...defining a long period of resistance or support depending on the trend of the share price. This chart shows resistance at 3290ish and a first support at 3210... see how today's fall touched that line and retreated. The next support comes in at 3150... not quite as strong as the previous one but the last one at 3100 is VERY Strong. This roughly confirms the supports in the P&F chart The tiny circle in the main chart shows that the share value fell to the lower bollie. There is a bit of hope that there will be a pullback towards the 20daySMA... but that hope is faint at best.... still that green support line may hold for a while. Both the Slow Slow and MACD continue their drop now with a slight increase in slope. The BBWidth is showing its first hint of a reversal in slope.... If that up-tick continues stronger then this will signal a huge sell signal....right now it is only a distinct possibility. Sentiment and Ichimoku charts The indicators of my Sentiment chart are not encouraging. The Force 30 has dipped below zero and now is in bearish mud The RSI(30) is headed to bearish territory and the ADX DI+/- is whisper away from a bearish cross. Now it must be said that this situation has happened before in early December and recovered....but I think the coronavirus situation was unknown the so today there are added pressures. The Ichimoku chart has now begun to lean to the bear. In the top circle the thin red/blue lines look to start reversing positions. The outer edges of a cloud are resistance/support levels depending on how they are approached. the arrows show flat spots on the edges at 3200 a support on the first arrow and as a resistance if the share value falls below the cloud. Again confirmation of previously identified resistance/supports. The On bal volume is fine. The CCI is headed for bearish territory The CFM is definitely headed for bear territory Conclusion Anyone thinking that the $SPX is heading for a return to a bull run soon is dreaming in technicolor. While there is a faint hope that there will be little or no further decline, I would not bet the farm on that possibility. I believe we are NOW on the edge of a significant correction. The $SPX is now showing its hand and it does not look good. I suppose a lot depends on the progress of this coronavirus. There is no cure riding to our rescue and like SARS this disease will have to run its course and that will take time. My advice would be to review your holdings and take appropriate precautions for the future. UE

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