Saturday, May 3, 2008

S&P 500

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Today I would like to refer to 1-year S&P 500 chart. I have not been showing this chart for a long time – last time I have mentioned it on February 2, 2008 in my "S&P 500" report. I have mentioned 2-year S&P 500 chart in my "Technical Analysis" post on February 16, 2008. As you may see from these posts, time on time I refer to the big time-frame of the S&P 500 chart in order to evaluate longer term of the stock market trend. Those who read my posts may notice that over the last 3 months I have been somewhat aggressive about the recovery. I know that many of big and small traders were bearish that time (thanks to the media) and maybe skeptically looked at my bullish posts. I think there are still a lot of traders (those who follows news) who still believe in the global market crash based on the U.S. housing problem, high oil prices and fear of inflation. I may only say to them - "Good Luck, until you are bearish those who follow charts by ignoring CNN is making money…"

So today I coming back to 1-year chart to show the technical indicators that were screaming in all market sectors including DOW 30, NASDAQ 100 and S&P 500 starting from the middle of January and which did confirmed later that we are in bull market.

From this chart you may see the unbelievably huge volume surge in period from January 8 until January 25, 2008. As I have mentioned simultaneously before, it’s impossible for the stock market to go further down after such huge volume release. We should always remember (I’m repeating myself): the volume is two-side transaction – there are always a buyer and a seller. Some group of the investors was buying from those who sold in panic in that period, and those investors, who were able to buy such huge number of stock shares, dramatically reduced the number of panic traders. The same group of investors was buying in period from March 7 until March 24, 2008 and they are still buying… This is my GOLDER rule of the Stock Market Technical analysis "The big volume surge leads to the changes in the supply/demand balance" - the rest of analysis follow…

From the same chart I may see that there is still room for the market to go higher. We still have not seen any volume release to the price up move – I still do not see that those who were buying in January – March 2008 started to sell.

S&P 500 cchart