In a world of fast moving information and content overload it is easy to get caught up in the short timeframes. Over here at InvestingHaven we always check all timeframes, in a top down fashion (longest timeframes first). When looking at the S&P 500 charts we get really excited about the long term chart. It is clear that ultimately this market will crush our 2021 forecasts acknowledging we predicted a bullish market. However, short to medium term this market is vulnerable. This is why.
The weekly S&P 500 chart has the answer, and what a strong setup we see on there.
Early March we wrote this A Beautiful Secular Trendline On The S&P 500 Chart. In there
The secular S&P 500 chart on 40 years has one simple trendline which has been decisive since 1983:
- This trendline was touched in 1983 before a major bull market started which lasted 17 years.
- It was when the 2008 market crash accelerated that this long term trendline was broken to the downside.
- In 2014/2015 this trendline provided resistance after which the 2015/2016 temporary downtrend in stocks started.
- It was exactly at that point where the epic 2020 Corona crash started.
- Since December of 2020 the S&P 500 trades above this secular trendline, and has tested it multiple times as support.
Let’s review where the market currently trades against this trendline: it is above it for +1 month now!
The thick red rising trendline on the first chart, the weekly chart, is the one we were referring to earlier. We observe some 7 weekly candles above this trendline, without touching it.
This really suggests that stocks are accelerating their uptrend in the really bigger scheme of things. The good news: more upside, and the ideal environment for some sectors to go ild. The bad news: a bubble is underway!
The daily chart post-Corona crash simply shows how strong the uptrend since last April has been. Right now the S&P 500 trades exactly at its median line. It looks a bit tired. We believe it is vulnerable to move back to 4,000 points before or around summer time. This would be a healthy retracement in the context of a long term uptrend.
Enjoying our work? We invest in broad stocks as well as commodities in our Momentum Investing portfolio. In our Trade Alerts premium service we focus on SPX trading in the short term. Next to SPX trading we take a few swing trades per year. In 2020 the combined portfolio delivered +93%. Results are tracked in our trade log books, and publicly shared every 6 months on our Mission 2026 page.
