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Sunday, October 31, 2010
This is a chart back from May 7th, and shows an interesting pattern that I had been watching for the last year. Early on in the hope rally there started to be a pattern, and a relationship in the angles of the trend lines off of the low. Each new trendline had an increase in the angle that was very consistent and with a little math I was able to lay out the next trendline before it was ever in play. The gray trendline was put-up well before the July low, and at 1010, the SPX hit that trendline and bounced. Also notice that once a trendline of support was broke and became resistance, the SPX never was able to break above that resistance. Here is a current chart, with the addition of a new trendline based upon the relationship of the previous trendlines. If this pattern holds up, a break of the current trendline would push support for the SPX WAY down to the 800-825 level.
Also of note, the indicators on the above daily chart have all rolled over to a sell.