SPX update: a look at long term trends and simple moving averages

This is an excerpt of this week’s “weekly digest” available to premium members only because Intelligent Investing is celebrating it’s first year with this new website. As such everybody can now join I.I. for FREE for one month without any obligations*. Click here to sign up now.

Monthly chart

With the month of June in the bag, let’s take a look at the monthly chart to see what additional evidence it can provide. The 1st item is the negative divergence on the RSI5. The 2nd item is the MACD sell-signal since March of this year, but the A.I. and FSTO do not give clear sell-signals. CLICK CHARTS TO ENLARGE.

monthly trendlines

The 3rd item are the long term trend lines (green and blue): price is still within the green and blue uptrend channels, and has not dropped below the upper green or lower blue trend line: trend remains up longer term (for now). 4th item is that the monthly SAR is still below price: long term uptrend. The 5th item is that price remained and closed above the 10m, 20m and 50m SMAs, adding weight to the evidence of a continued long term uptrend. Again, this is what we can OBSERVE. Once the charts change, we’ll change along. No need to front run, assume and/or guess.

Simple Moving Averages (LT-SMA, ST-SMA) charts

Now with this week to an end, a new look is warranted at the SMA charts. Let’s take a look at the longer term SMA chart first (A). The 1st item we can observe is all SMAs on the LT-SMAs  are still bullishly stacked, and except for 2 SMAs, all continue to point up. However, price dropped below the upper 6 SMAs.

SMA charts

As such the chart is predominantly bullish. But, please compare this to the 2009 and 2011 bear markets (see insert); the current LT-SMA chart is not even close to those set ups. This is in line with the trends on the monthly chart.

The Short Term-SMA chart, B, however, remains bearish with the fastest SMA now well below the slowest SMA (dotted line). The last time this happened was during the October 2014 correction. However, note the slowest SMA keeps increasing; and compared that to for example the 2010, 2011 and 2012 corrections (green arrow vs the red and blue arrow in lower chart). Again, this is what we can observe. Once the charts change either for the worse or better, and they absolutely can, we’ll change along.

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