The Long-Term Technical View

By Carl Swenlin, Decision Point

At month end we like to look at the monthly chart to refresh our long-term view of the market.

The outstanding feature on the chart is the trading range between about 750 and 1550. Two bull markets have ended their run at the top of the range, and the current bull is only about 150 points below that long-term resistance.

A bit more subtle is the current PMO (Price Momentum Oscillator) pattern. Note how it resembles the PMO patterns around the two previous major tops. This pattern plus the approach of price to long-term resistance, leads us to believe that the bull market has very little time left.

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  • Andrew P

    If it stays in this range, at least we get a good idea of how to buy low and sell high.

  • JL

    What we know now is that the two previous peaks were bubbles (the first one without profits, the second one with record profits but still a bubble). At the same time the third peak is the consequence of well functioning and healthy economy….? I don’t get it, please explain?

  • kman

    “At the same time the third peak is the consequence of well functioning and healthy economy….?”

    Think about that one for a while, define the terms and let it sink and and sleep on it. Well functioning and healthy huh ???? QE4

  • http://www.dowtheoryinvestment.com Manuel Blay

    There is another technical study that confirms that the advancing prices may have little time left: The Dow Theory.

    While under “Dow Theory” one can find many “flavors” (some of them very long term oriented, others shorter term oriented), currently there is an eery unanimity among Dow Theorists as to the existence of a primary bear market. While such unusual unanimity may be construed as a contrary indicator…:=) , it seems that the technical odds favor declining prices for the months ahead.

    Here you have a more in-depth analysis:

    http://www.dowtheoryinvestment.com/2012/11/dow-theory-recap-what-are-other-dow.html

    Regards

  • Adrian

    Technically is not looking too good but you have to think about the economic conditions at the top of the preview bubbles and this time it feels like we are not there quite yet.
    It’s a good chance this rally will last for some time and make a now high.

  • Jason

    I guess it depends upon who’s neighborhood one lives in. Here I see homes going up and people buying into the Christmas season. I also have witness to my own tendencies regarding all of this — something that mirrors more optimism than gloom. I also know that the big corps sit on top of huge cash positions. Anything more than this on the upside I’ll leave for the morons of gloom to dig for them selves.

  • perpetual neophyte

    This chart seems great at telling us what was, but how good was it at predicting what would be? In 2006 after a quick drop, was this series being interpreted as the $SPX having a few hundred more points to the upside?

    How about 2010?

    Or were these historical patterns not yet established because you can’t see what will be when you are driving with the rear-view mirror?