Another look at the 760 level's significance in the S&P 500; plus charts review for gold, oil, dollar, bonds, and market internals

Here's a review of various markets we're following, followed by an additional look at why the 760 level in the S&P 500 looks significant on the charts and we may be testing it some more. First bonds - Treasury bonds have been consolidating sideways for quite a while, so it's reasonable to think they will make a significant move either up or down. So Treasury bond traders are likely to follow strongly either direction. TLT is still above its 200-day moving average so it cannot be assumed that the next direction is down - could be, but just not a slam-dunk assumption:

Gold pushed down hard on the lower channel trendline, along with indicators testing down also. It also can support a move higher. So which might it be, golds OR bonds moving up? Or perhaps both - that's not typical, but does happen sometimes. Above the channel support, gold can be given the benefit of the doubt for another leg higher:


Oil has been struggling a bit, although still in positive territory, as you can see delineated in my chart markings on the exchange-traded fund, USO. The volumes have not really helped push it up. We're not very surprised since we identified that oil is unlikely to have new highs as viewed on its very long-term charts - certainly not anytime in the foreseeable future. There's plenty of chart resistance too, along with the declining 200-day moving average. But we have hopes (although "hope" is a terrible word for trading markets) that the on-balance volume will pick up and we could see a move to one of the levels marked on this chart:


I had thought the dollar would get to 91 on this chart of $USD (below). It still may do so but clearly has been losing momentum. After testing up above 89, it dropped back down to short-term trendline support. Actually it looks like it may have tested under that Friday, then closed right about at that short-term trendline. Additional support is shown by the horizontal red line I marked, and there are also moving averages about the same area that can provide support if it continues a lower pullback. The 200-day moving average is still rising, so after the dollar finishes its pullback - either now, or soon - it can make another effort to reach higher.


The McClellan charts show that not only has the Oscillator moved up strongly with this move, but also the Summation Index has curled up. This is positive for the longer term - even if all we get is a bear market rally, it supports the strength of the move. It can be interpreted as short-term overbought. Notice the 5%/10% index is testing to the zero line on both the NYSE and Nasdaq McClellan charts.


Now, I'm going to go ahead and post again my SPX weekly and monthly charts. In my earlier post today, I talked about max pain at approximately 760 SPX (77 in SPY), and there are other reasons to look carefully at the range of 760-770 including Elliott Wave, trendlines, and moving averages. When looking again closely at my weekly and monthly SPX charts, and adjusting for where the weekly chart's channel mid-line will be next week, it actually looks like the level of approximately 760 is about on that midline. (You can click on the charts which will bring them up larger.)

Furthermore, the level about 760-770 is also a re-test to the 2002/2003 lows as you can see on the monthly chart. A few months ago when I set up the monthly chart and drew a line at about the 760/770 level, I did it partly because that was the area around the 2002/2003 lows. And also, because the SPX has shown an interesting ability to resonate around the levels of 760, 860, 960 and 1060. (Also interesting for feng shui fans since 760 points to the number 13 which is considered lucky in that system - but I don't know that it works for trading. Ditto for those who notice that 940, 850, 760 and 670 seem important levels each with a value of 90 in-between ... but we can see what happens at 580 if we get there!) The apparent significance of the levels ending with "60" doesn't take away from other important pivot levels. There just seems to be something about these numbers, when you look at where the market has tested on the monthly chart over the years. (It's even interesting that the areas around 460, 560, and 660 show up for significant Fibonacci levels on my monthly chart.) So 760 SPX can be an important level for the markets at this time period!


Well, I would indeed turn much more positive on the markets if and when the SPX would move down to land really on my lower trendlines and Fibonacci numbers, including 664 (which we got close to but not on - and I'd really rather get on it). But I'll play along if the market wants a bear-market rally that moves above SPX 760/770. In the meantime, my friends, take a look at this article, S&P 500 Trends, 1980 - 2009 posted at SeekingAlpha yesterday (3/13/09) by Richard Shaw - quite an interesting read, including info on what Goldman Sachs, Morgan Stanley, Nouriel Roubini, Jeremy Grantham, and others are projecting for the rest of this year (and his other article yesterday, “Winter Warming, More Snow to Come” at his firm - I don't know them at all, but it's an interesting article).