Home On The Range (by facesincabs)

What an "in your face" start to the month of September!  I am not too bothered, as I am expecting lots more fireworks (and surprises) over the next couple of months.  For today, I am focusing my post briefly on just two charts.  They are generally self-explanatory.

http://tinyurl.com/2uumdpw (S&P 500 twists, turns and swings ... watching now for a 3% break)

http://tinyurl.com/35c6vhc (Bulls pushed small cap's back into the Force 1 channel)

The picture is mixed here.  Both Force 1 and Force 2 are in play on the Russell 2000 chart.  And on the S&P 500, we are obviously in a broader declining channel (e.g., look at a weekly chart for this) with several levels of resistance to overcome in the short term.  This morning, the bulls did (once again) protect the lower trend line for the March 2009 counter trend rally, but one day does not make a trend change.  Looking ahead, I still see firm resistance at 1100 (big number) and then 1131.

An Important Divergence

I do see one important divergence today, and that is the 10 Year Note Yield.  It did not make a higher high than Monday (at least so far) while the major indexes already have.  I mention this, because I have been reliably and very profitably trading based on what the bond yields do compared to the equity markets.  Currently, the divergence by the 10 Year Note Yield today would suggest that the spike up still needs to prove itself with a follow through day.

Year 2008 vs. Year 2010

I looked at the basis for a comparison (e.g., analog) between September-October 2008 and September-October 2010 and there are not enough basic similarities to conduct a full blown analysis.  Not only are the major index chart patterns different between the two years, but also the volume profiles are very different.  Therefore, I will not be doing further analysis on that idea.