You Diggin this S&P 500 ‘Correction’

Don’t get too comfy. The pullback found support on the daily chart below right at the bottom rail of the rising wedge, continuing the trend support that began in October. The Relative Strength Index bounced too, staying bullish. From this perspective a pullback upon hitting the high from May 2nd seems kind of natural. That was more than a 20% correction. You would expect some long holders

to unload after rising back to the dropping off point. But that does not mean the uptrend is over. Look from a longer term perspective. The weekly chart below shows the bullish (green) and bearish (red) Andrew’s Pitchforks lay out the battlefield over the last two years. In this instance the bullish case is winning with the price being attracted to the Median Line of that Pitchfork higher. Yes it has pulled back a bit but look left to all the support in the 1340 area. Peaks in February, March, April,

June and July 2011. There is a lot of previous volume in the blue oval that needs to be worked through before any major move lower can happen. Look at the Volume at Price bar between 1315 and 1340. It is the biggest by far for over 100 points to the downside. It is headed to the upside today but the S&P 500 may go lower. But until it gets under 1315 consider it a mild pullback in an uptrending market.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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