24 SEP 2009, Thursday

1. Uh oh....just the Eye of the Storm?
2. WOW!!! We got a down day yesterday. I mean a down day. You know? When the price closes less than the day before? LOL...note the sarcasm. "Da Boyz" had been levitating this thing right into the Federal Reserve Open Market Committee meeting yesterday where they announced "no change" on interest rates...big surprise huh? OK, so now do they let it corrrect a little and ramp it back up into early October to get the last bit of automatic IRA money in at higher prices? We'll see! But, indeed "Da Boyz" have got the sheeple conditioned to buy the dips which is just what they need so they can sell their inventory to the "bagholders".
3. So, how might this work? Below, on the SP500 chart, I was drawing a few long term trendlines and lo and behold something interesting popped up: 1) On the upper left you'll see the value 1121 (boxed) which is the 50% retracement of the whole downmove, 2) light blue trendline sloping downward connects the October 2007 highs and the 2008 highs, 3) dark purple trendline sloping upward connects the October 2002 lows and the March 2003 lows, 4) next, the yellow up trendlines contain the entire move up from March 2009 and the steeper one contains the most recent up move since mid-July.
4. Hmmm.....look where they all coincide in another few weeks???
5. Don't believe in trendlines? Let me demonstrate....(and, by the way this really pisses me off because my charting service didn't have the SP500 history earlier than 1985 until mid May this year so I was forced to extrapolate off of Dow Industrials data which was a stretch....now I've got SP500 data back to 1971)...but I digress...back to demonstrating the power of simple trendlines at times...
6. Look at the very bottom of the price chart and you'll see a light blue upsloping (looks almost flat even) trendline. See it? Well, that trendline connects the August 1982 lows and the October 1987 lows. Hmmm...seems to be about where that huge downmove halted in the high 600's. Dang I wish I had that data in March...would have increased my confidence immeasurably.
7. Oh well....everyday is a new adventure. I've been trading this market while it defies gravity and am watching for trend change signs. Breaking and staying below those yellow trendlines will be first then a lower swing high followed by a lower swing low.
8. You can see the horizontal support and resistance areas...look for the multi day peaks and valleys. Initial minor support is the late August highs with initial major support at the early September lows.