I’ve added some more volume by price support lines and updated the chart.
To me this shows the volume and where the majority entered the market after the Y2K bear. Almost 2 years of consolidation setting up the bear to bull transition. No doubt about it…this is [B]THE [/B]key price pocket. Volume = market sentiment and it’s staring us in the face. Now the question is do the big money players have chips on the table still, if so they support that line…if not they let it tank through and get in MUCH below that pocket of support.

The above I posted on the web on Jan. 23rd.
The levels I posted back then are coming up. 10,700 remains the most important level I can see. If we stay above that, the point of control is upheld and long term investors will hold albeit with a load of steamy crap in their pants at this point. If we break below there with conviction (especially close below) I’d look for massive bloodshed to accompany the crap in the pants.
I’m looking at that volume pocket as a fault line, if we break that open it’s going to be like an earthquake when we have plate shifting at the earths core.

Here’s an updated chart. In bell curve terms this is a chance to revert and test the MEAN. This testing is something the market does all the time on different timeframes. It’s how value is probed in a 2 way auction. Goes higher, no interest…revert to the mean and see if there’s interest. If there’s no interest there it goes lower till there is no interest and then back to the mean. From the mean any direction could be tested FWIW, including chopping around and coiling at that section of price. My signature sums up how I feel about market movements.

I called for a pullback test back on April 18th. I never thought it would have went this way and taken so long, but here is our test finally.
Macd and macd histogram divergence on last weeks close, which is lower than the prior closes. 200ma is double support backing this trendline as well.

The bigger picture, why can it be important to not solely focus on micro levels and step back sometimes?

In addition to my micro level chart we can now see a more defined channel. Plus much more is visible that is acting as support now. So, we have the downtrend broken and testing (from prior chart), 200ma and a now an added swing high as support. How about a trendline from all the way back to October 2004? CHECK!

This is a crucial but fairly low risk level to get long IMO. If it fails to hold though look out, we could hit 11k fairly quickly if this stuff gives way.
Could get interesting on any hint of a rally, FOMC as Cire pointed out could make things even more testy and jerky.

As always JMHO.

Kind of an interesting view. On a lifetime yearly chart the last monster bull run didn’t even flinch, nor did it retrace even to 50% on the Y2K “crash”. I guess the question is how do fundamentals make this exponential market rise look? IS the market overbought up here, or is there still room for growth after such a big long run? We did break the range and have tested the prior swing level, though we aren’t even half way through the year so the test means little till it’s closed.

Another thought that made me LOL was the consolidation from 1965 through about 1983. All this talk of the market returns x% per year. And the 401k hype that you put in x% of your check and you’ll retire a millionaire. Who the hell are they fooling…well how about most of working class America. I mean of course it all depends on where you began investing, and where you cash out, and everything in between. But the pipe dream of the market always giving gains is anything but a guarantee, there’s a 20 year span that might not have done much for your nest egg. Ask those that tried to retire after the Y2K started it’s down move. How many put off retirement cause they were down so far that the simply couldn’t afford to retire at that point.

How many ran and sold in ‘87? That looks like not even a blip on this view of the market. The market is bigger than most of us think about, myself included. All it takes is a gander at something like this chart to really make you think about your daytrades or even swing trades. We get excited on some of these 50 point gaps, but in the bigger picture its a tick. You can do this on ANY timeframe, and this is why it’s important to roll back and look at the bigger picture. All good traders seem to use multiple time frames, and this is partially why. This is the equivalent of living on the ground all your life, and you finally take a plane ride and see things from 10,000 feet. You realize how small a speck you and your house is, and how little your life means in the grand scheme.

Enough of my ramblings, just wanted to provoke some thoughts and discussions.

Come chat with us in the FORUM.