Why an S&P 500 Drop Is No Surprise

Why an S&P 500 Drop Is No Surprise
December 10 01:41 2018

This is a long-term view of the S&P 500 that I have referenced over the course of this year.  It’s basically a 10 year view of price action by looking at a weekly time frame.

Coming Back to Earth

Looking at the chart you can see all that really has happened this year is that we returned to the upper trendline of this 10 year ascending channel.

It has been my target all along for any short positions I have put on.

Now that we have retraced to it the big question is if we will re-enter it.  As you can see from the chart there have been many prior occasions where price has pulled back to it and held before rising again.

Looking a bit Toppy

Looking at that price action this year, it does look toppy to me.  The volatility ticking up this year is what has gained my attention.  You usually see an up tick in volatility at reversal points.  Many people talk about them for bottoms in a market, but it works just the same for tops.

If price enters back into this ascending channel than the 2,400 area becomes a legitimate downside target.

It will be interesting to see what the rest of the year brings and how 2019 starts out.

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