Hewison Video Asks Has the SP500 Broken Support?

Nov 3, 2009: 12:39 PM CST

Adam Hewison released a new update video on the S&P 500 this morning entitled “Has the S&P 500 Broken Final Support?” or alternately titled “Weekly Sell Triangle on S&P 500”.  I was impressed with how much Adam compressed in this brief 5-minute video!


(Image links to video page)

The chart I captured above shows where Adam is describing the long-term trendline originating from the March 2009 lows which was recently broken with closes to the downside (we’re beneath that as of this writing).

There’s another shorter term trendline that connects the three recent August, September, and October lows which also was broken at the same time as the longer trendline.

In addition to describing this trendline, Adam highlights key downside ‘targets’ or Fibonacci retracement prices to watch for possible support and describes the possibility of a short-term head and shoulders reversal pattern (in the event that we get one more swing up that fails to make a new high) and that that might mean.

He also sneaks in a discussion of the negative MACD divergence that I’ve also been showing as well.

He concludes the video by showing the recent “Trade Triangle” signal from the Market-Club software, which has triggered a weekly sell signal as of Monday.

I would suggest that 1,000 would be the “final” support level to watch because of the ‘psychological’ significance at that area, as well as the October support lows just above 1,000.  Still, the breakdown of two trendlines does not bode well for buyers.

The big question on everyone’s mind is whether or not this is “just another bear trap” or the beginning of a substantial (or even intermediate term) retracement.

Let’s keep a close eye on these levels and possibilities, particularly given that we have a Federal Reserve announcement on Wednesday and the “Jobs Report” on Friday.

Be safe.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

The link and chart are provided with permission as an affiliate member of Market Club.

16 Comments

16 Responses to “Hewison Video Asks Has the SP500 Broken Support?”

  1. terlyn Says:

    I vote for the second option…head and shoulders.

  2. Dan de Man Says:

    I vote bear trap. One option for safe trading is scaling in. Half now and half when and if we break the 10 day ema or 3/10 crossover.

  3. Corey Rosenbloom, CMT Says:

    The way the market has been making minor wave patterns up and down, there's definitely ample reason to believe that will continue.

    In that event, a break of a head and shoulders pattern – akin to what we had in June – will be a powerful (and obvious) sell signal.

    But will it fail just as miserably as the July trigger short?

  4. Corey Rosenbloom, CMT Says:

    Ouch – another one? I try to be neutral biased in my intraday trading, but just have to wonder like 95% of the rest of the trading community when a sell signal will actually 'work.' I've never seen anything like this.

    Someone on TV described it as cramming for a college exam and drinking lots of coffee to stay up late all night. After the exam is over (hopefully not during the exam) … you crash and the after affect was worse than if you'd just gone to sleep a little late instead of pulling an all nighter.

  5. Dan de Man Says:

    Yes I have to agree with you; I also try to be neutral in my trading. And its very frustrating to not have some real panic selling to make it a safer long. I like going long and short but the stochastics are starting to point up but as we all know anything can happen.

  6. terlyn Says:

    Looking at SPY year to date, if we are seeing a rounded reversal, it hasn't made the second bump yet to bring the sellers outweighing the buyers. Also, yesterday was a positive doji and today couldl be a bullish engulfing pattern as of 3:14pm. This could change by the end of the session.

  7. terlyn Says:

    I see a triangle pointing up on SPY from yesterday. Could break to the upside?

  8. Dan de Man Says:

    Looks like the VIX is rolling over…

  9. terlyn Says:

    I vote for the second option…head and shoulders.

  10. Dan de Man Says:

    I vote bear trap. One option for safe trading is scaling in. Half now and half when and if we break the 10 day ema or 3/10 crossover.

  11. Corey Rosenbloom, CMT Says:

    The way the market has been making minor wave patterns up and down, there's definitely ample reason to believe that will continue.

    In that event, a break of a head and shoulders pattern – akin to what we had in June – will be a powerful (and obvious) sell signal.

    But will it fail just as miserably as the July trigger short? That's why I feel the 1,000 area is of utmost importance to watch.

  12. Corey Rosenbloom, CMT Says:

    Ouch – another one? I try to be neutral biased in my intraday trading, but just have to wonder like 95% of the rest of the trading community when a sell signal will actually 'work.' I've never seen anything like this.

    Someone on TV described it as cramming for a college exam and drinking lots of coffee to stay up late all night. After the exam is over (hopefully not during the exam) … you crash and the after affect was worse than if you'd just gone to sleep a little late instead of pulling an all nighter.

  13. Dan de Man Says:

    Yes I have to agree with you; I also try to be neutral in my trading. And its very frustrating to not have some real panic selling to make it a safer long. I like going long and short but the stochastics are starting to point up but as we all know anything can happen.

  14. terlyn Says:

    Looking at SPY year to date, if we are seeing a rounded reversal, it hasn't made the second bump yet to bring the sellers outweighing the buyers. Also, yesterday was a positive doji and today couldl be a bullish engulfing pattern as of 3:14pm. This could change by the end of the session.

  15. terlyn Says:

    I see a triangle pointing up on SPY from yesterday. Could break to the upside?

  16. Dan de Man Says:

    Looks like the VIX is rolling over…