Expandable picture ( http://twitpic.com/b1efy )
A couple of days ago i watched a video by Brian Shannon @alphatrends in which he asked viewers to step back and look at the larger time frames. And that is just what i did.
In the last week the technicians have obsessed with the Head and Shoulders pattern on the S&P 500 which didnt break down. A lot of commentators, see this as a bullish move, however if we look at the S&P 500 since Jan 2007, we can see that the index was in a channel between the line A (tested 4 times on the upside) and B (tested 5 times on the bottom) and C (spike bottom: tested by 3 spikes). This channel that held for 14 months finally broke down in October 2008. Although there is much optimism about the current levels of the S&P500 currently at 951.13, we havent even pushed up into this channel. I assume according to the line C there would be stiff resistance at 952.50 and even tougher resistance at line B at 985 ish. And if my charting doesn't spook you about where the S&P is trading then maybe the solar eclipse this coming Wednesday will.
http://news.yahoo.com/s/afp/20090720/ts_afp/scienceastronomyeclipseasiatourismsuperstition_20090720054915
Would love the hear the opinion of other traders out there especially those who trade patterns off channels.
Cheers!
JRod
