Wednesday, June 2, 2010

Lines in the Sand

After spoiling chartists with a clean and easily definable head and shoulders and bear retracement pattern over the last month, it seems the S&P has returned to murky waters. Since bottoming out last week the S&P 500 Index has thus far settled into a choppy range between 1050 and 1105. In my own attempt at simplifying charting I'm a staunch believer in the notion that less is more. I often use simple horizontal lines in highlighting key support or resistance levels. These lines in the sand represent pivotal points in the chart that if broken would change my short term outlook. Currently the two closest benchmarks reside at 1050 and 1105.

So long as we meander between these levels I will maintain my lack of conviction as to the direction of the next short to intermediate term move in the SPX. On the other hand, once we break above or below either level I'll be anticipating some follow through (click image to enlarge).