by Erik McCurdy
The S&P 500 index closed moderately lower this week, moving below support at the lower boundary of the cyclical uptrend and beginning a test of new congestion support in the 1,300 area.
Other important global markets are also showing some behaviors related to the S&P 500. We will examine the questions being raised when examining stock charts this week.
The breakdown in Europe was more pronounced than in the US, strongly favoring a relatively quick move down to support at the bottom of the Bollinger bands and the 50-week moving average in the 226 area. The Chinese stock market has been trending lower since the long-term high in 2009, and the Shanghai composite moved up to test downtrend resistance early this week before reversing and closing slightly lower.
Erik McCurdy is the senior market technician for Prometheus Market Insight and has been analyzing charts every day for over 15 years. The software program that he developed to monitor long-term stock market trends has correctly predicted over 90% of the long-term turning points in the S&P 500 index since 1940. His Gold Currency Index has predicted every major trend change in the US gold market since its creation in 2005. The Prometheus Market Insight newsletter service provides daily, weekly and monthly forecasts for stocks, bonds, currencies, commodities and precious metals using proven computer models that base their predictions on technical and cycle analysis.