S&P500 update: something very profound just happened.

Markets are made from the short term to the long term, and although we see short term a small peak for the S&P500 at SPX2275-2285, a quick ~20 +/-5 p drop, followed by another rally to SPX2300, which by no means is the final top, something profound is happening on the long term charts (monthly candlestick chart shown).

Namely, price is breaking above two very important long term trendlines, that go back to the price tops made in 2000 and 2007 (red and green; respectively). This development is profound and has long term (months to years) ramifications. In the first place because resistance can then act as support, in the 2nd place it means the market has entered a new bullish phase, leaving behind what has kept it in check over the past 15+ years.

spx-monthly

In addition to those two trendlines, price is also breaking above the (somewhat shorter term) black trendline. Hence, also here the market is breaking away from what has kept it in check since its price low made in 2009.

These break aways are further supported by

  1. The buy cross over on the monthly MACD. Every time this monthly MACD-buy signal happened since 1991 the market rallied for months to years with of course some corrections along the way. Hence, this buy-signal supports the “breaking away” thesis and supports the “multi-month to years rally” ahead notion.
  2. The expanding monthly bollinger bands, while price is pushing against the upper band. Normally such setup on the daily timeframe signals a rally for days to weeks. On the monthly time-frame this will mean the rally will be much longer than that.

With price well-above its 20m, 50m, and 200m Simple Moving Averages, and these SMAs all rising, it supports the observation that on the long term timeframe (months to years) the trend is up.

Of course there will be corrections along the way (of the minor, intermediate, major and even primary wave degree), and those should be successfully navigated by traders and investors alike with the help of advice and insights by experts, but this simple chart tells us clearly the trend is up, the market is breaking out and we should expect much higher prices going forward.

 

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