A Quick Look at the Monthly SP 500 Sept 19

Sep 19, 2009: 3:24 PM CST

A reader brought this chart to my attention, and I wanted to show a version of the monthly S&P 500 Index with respect to the 20 month SMA, RSI Indicator, and McClellan Oscillator.

This is a deviation from what I normally show, but this time we’re looking at volume, the RSI Indicator, and NYSE McClellan Oscillator (a breadth oscillator) on the monthly frame.

Price has rallied upwards to the falling 20 month simple moving average (green) and has done so on falling volume virtually every month since the March 2009 lows.

The RSI – coming off of deeply oversold territory – rests just shy of the 50 level, which alone can provide resistance (at the half-way junction).

Finally, the NYSE McClellan Oscillator, as I mentioned in a previous post, is forming a divergence with price.  The oscillator spike to 75 (closing basis), which was the highest level seen since the birth of the 2004 rally that led us to the 2007 highs.

Bursts up like this in the McClellan Oscillator are positive, and can underlie future strength… as we’ve seen off the late 2008/early 2009 burst to new highs.

The Oscillator is forming a distinct negative divergence with price as we’ve continued to rally – that’s a bearish non-confirmation.

As bulls have shown, there’s no guarantee these developments will lead to a down move, but it’s something the bulls certainly have to overcome to keep the market rallying.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

6 Comments

6 Responses to “A Quick Look at the Monthly SP 500 Sept 19”

  1. redvetttes Says:

    Its been a low volume,short covering,short dollar,long everything else,pump and dump,Everybody is shaking there heads,copper has been at a stand-still,Oil not going anywhere,there more tankers standing around then you can count.20 % on unenploymert,35% on food stamps.

    Picture being on an airplane full of people,with 6 spare parachutes,Look up front and you will see the Goldman Boys sitting by the door wearing there chutes.When it crackes go long the 3x inverce ETF .There shorted to shit.Was watching SRS when IYR rollover.it did big volume.One more short squee (S&P 950-975) soon then back up.FWIW

  2. Carlos Says:

    Hey, My 2 cents.
    my indicador until now at yellow alert very close red line. If we compare with other movements can still expect a test red line so mybe top medium ou long term between 1105 ( Major Trend) or 1120 (retracement 50%).After that I expect a drop until the MM50 eventually http://followmarketrend.blogspot.com/2009/09/sp

  3. JeffreyLin Says:

    funny how we have to pull back all the way to monthlies now (not sure how many do that on a regular basis!) to analyze the market's amazing rally and look for any levels of possible retracement for resistance…we've blown through all the lower time frames! hope ur doing well corey, have a great weekend buddy!

  4. the99th Says:

    Amazing how clean that looks on the monthly scale. It would make you forget all the petty grinding that permabears have been doing since March and permabulls have been doing since Dec. 2007.

  5. the99th Says:

    Amazing how clean that looks on the monthly scale. It would make you forget all the petty grinding that permabears have been doing since March and permabulls have been doing since Dec. 2007.

  6. Trading News Center Says:

    A Quick Look at the Monthly SP 500…

    A reader brought this chart to my attention, and I wanted to show a version of the monthly S&P 500 Index with respect to the 20 month SMA, RSI Indicator, and McClellan Oscillator….