Long Term Charts - tag category postings

Yesterday we touched a very important long term up trend line.  The up trend line that has been in force since the March 6, 2009 low.  This long term up trend line has now been touched 3 times including yesterday. 

The line represents the bullish trend.  Despite all the sideways price action over the last several months the fact remains that we are still trading above this key longer term up trend line.

I usually like to see a strong reaction up from a trend line to show that there is real demand in the market.  We already had a  strong bounce up off of this trend line after July 1st, 2010.  Whether we get another one during the next week or two remains to be seen.

A pretty simple chart but important to watch closely because if the bears are not able to bust below this up trend line with conviction during the next two weeks then it is going to significantly weaken the longer term bearish scenario. . .

You really need to study this long term gold mining stock index chart.  It was sent to me by a buddy of mine and the chart was made by one of the regular blog posters over at www.jsmineset.com . 

It is a super long term gold mining stock index chart that goes all the way back to the 1920’s.  What absolutely blows my mind about this chart is that it shows that the GOLD MINING STOCK sector has still not really even had a breakout from the trading range that began in 1980 !!!

This is an amazing chart!

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The SP500 is about to get a bullish monthly crossover on the MACD indicator, a popular moving average combination indicator that can become very useful over longer time frames.  The monthly MACD signals can signify new major bull or bear market moves with sometimes 1 year or more duration.

The current daily MACD signal is starting to flash some near term sell signals and could set us up for a move to test the 940-945 range on the SP500. 

It is confusing sometimes when you have a sell signal on one time frame and a buy signal on a different time frame.  To help clear the confusion, I always keep in mind that the longer term time frames have precedence over the shorter ones.  So while we could get some selling pressure into 940-945, we must remember that the longer term signal is indicating higher prices.

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Have you ever thought what might cause the gold price to go truly parabolic (aka vertical) ?  It seems that the personality of the gold price is one of parabolic structure.  That was the case in the 70’s and so I see no reason to believe this will not be the case now.  It probably will.

The chart above is the US Dollar Index chart plotted with YEARLY price bars.  It should be quite clear that this is a very long term price chart since it takes a whole year just to complete one price bar !

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Big Picture Stock Market Forecast

It is time to put my finger on the chopping block and make some long term forecasts about where I believe the stock market is going longer term. I am doing this for myself in part just to give myself some clarity about where I stand now and then at least I will have a written framework to compare from down the road. This type of forecast is of course by no means guaranteed. Instead it is rough around the edges and subject to change at any time (consider subscribing to email updates for new perspectives). But again, I feel it important to write about this now since I feel it could be a very important turning point.

For the short term I believe we have made a meaningful bottom. I wrote earlier about how it looks like the Dow Jones Industrial Average has hit support at the bottom of a trading channel. I also wrote earlier about how extremely oversold the market is since at least 118 years based on the monthly RSI. We are even more oversold compared to 1933 based on the monthly RSI level. These factors contribute to a train of thought that says we are going to get an enormous bounce in the broad market that may last longer than many expect.

There is zero doubt that the economy is bad now and the banks are still having trouble. There is enough bad news out there to keep most reporters busy for at least another six months. It is almost fashionable to report bad economic news now, deflation bad housing market etc. etc. it goes on and on! But the news is always the worst right near the bottom and the best right at the top. The endless talk about banks and bailouts and stimulus and the morality of it all on main stream financial and news broadcasts is mind numbing. We need to break free from that mind set and focus on the logic and probabilities of the stock market structure going forward.

There was recently (this weekend) a special section in the Financial Times News paper devoted to “The Future of Capitalism” I have to take a contrarian stance to that type of news coverage. Maybe this headline falls in the same ballpark of the famous business week headline in 1980 of “The Death of Equities” ? I think capitalism is alive and well. We just happen to be in a period where we have a greater number of economic challenges than we are used to having. But nothing goes down in a straight line, and this is key.

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