This is another update post from my prior updates last week,

“S&P 500 Remains Above Trendline Support… for Now” and

“Rising Trendlines… the Only Thing that Matters Now?“  (still a yes it seems).

Let’s look inside the charts for the updated trendlines and add a potential “ascending triangle” pattern to the mix for good measure.

Be sure to reference the prior posts for the building blocks of why watching trendlines is important.

It would seem slightly cynical, but entirely appropriate to declare that “Only Trendlines Matter” in this current non-stop rally, and so far that’s been correct.

(UPDATE:  Market Internals Matter Too)

Our job as traders is to figure out what’s working, what the current market character/structure is, and then manage risk given the opportunities the market presents, either on an intraday or swing trading basis.

Right now, it may be helpful for you to pull everything off the charts and just monitor price in relation to the trendlines we’ve had really since the February 2010 lows.

The current rising trendlines rest at the 1,215 area and 1,197.  Price has bounced off these lines with the exception of a hideous bull trap on April 15 which was followed quickly by a mini-bear trap on April 19.

There’s something else to watch, and it’s the flattening or the horizontal line that you can draw at the 1,212 level.

Look at the insert image on the upper left to see this horizontal trendline, which – if accurate – is forming a clean ascending triangle pattern.

Ascending triangles are expected to break to the upside, but triangles are best viewed as consolidation patterns prior to a range expansion play.

Either way you label it, if we see a break above 1,213, we could trigger the triangle  ‘burst’ or impulse to the upside.

Otherwise, keep watching the trendlines for guidance until something changes.

Always remember that price moves via supply and demand – not indicators themselves.

Corey Rosenbloom, CMT
Afraid to Trade.com

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