SPX Monthly Chart
The monthly chart is often overlooked by the amateur investor who becomes easily distracted by the short-term fluctuations in price.The chart provides accurate sell signals given by the MACD indicator as highlighted above. The recent sell-off in price during late July allowed for this indicator to produce a bearish cross. Following each sell signal, price managed to rally back up to backtest each trendline drawn for the 2008 Bear Market and our current Bear Market of 2011. Bear Market rallies are powerful in strength and coupled with convincing optimism. The retail investor in a bear market is extremely hopeful of a fundamental outcome to validate his bullish case as news dissapoints and errodes sentiment. I hear so often that the recent sell off was nothing more than a correction, the 08 crash was an exception to the market, and last but not least, QE3 will save us. The Market has anticipated for a QE3 announcement from the lender of last resort since the ending of QE2. Quantitative Easing is not warranted during markets that are indicisive, but instead during panic selling as it will act as a cushion. I anticipate a drop to come in the market as I am fully confident Bernanke will then print money.Below I have annotated several charts that are self explanatory.
The Vix
The SPX Daily Chart
The U.S. Dollar Weekly chart
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