SP500 at 1,260 and Triple Index Performance in 2011

Dec 28, 2011: 11:24 AM CST

What a year it’s been!

Unless there’s a major surprise in the next few days, the S&P 500 will end 2011 right where it began the year – at the 1,260 price region making this a stagnant year despite two big volatile periods.

Let’s take a pre-end of year view of where the S&P 500’s been, what major patterns developed, and why in the world 1,260 was so important all year long.

SPX Price 2011

As 2011 began, the Federal Reserve was in the middle of a second round of Quantitative Easing – an aggressive policy designed to combat deflation by creating inflation whereby stock and commodity prices benefited.

The QE2 program officially ended on June 30, and despite one final swing up that fell shy of the 2011 high, the market collapsed in August in part due to the deterioration of the situation in Europe and in another part by the “Debt Ceiling” debacle and the subsequent US Credit Downgrade by Standard and Poors.

Price stabilized, the Fed began Operation Twist, the index bottomed with a vicious Bear Trap under 1,100 on October 4th which gave-way to a 15% power-rally.

Since then, price formed a small Symmetrical Triangle Pattern, it broke to achieve its target, and then December was its own narrow consolidation in the context of the confluence resistance at – surprise – 1,260.

Quantitative Easing, Operation Twist, Europe, Sovereign Debt, Greece, the “Arab Spring,” US Congress gridlock, Japan Earthquake, Central Bank Intervention – all these major headline events contributed to stock movement in 2011.

Let’s now shift to a “pure percentage” view of the Big Three US Equity Indexes:

Despite these big headline events and crises, the Stock Market stayed contained within well-defined ranges and shallow percentage moves for the majority of the year – August and October being the major exceptions.

At the peak – comparing with the 2011 January open – the market increased by 8% while at the bottom, the market fell by 12%.

It may feel like the market gyrated beyond those levels but it didn’t – 2011 was a range consolidation, flat sort of year despite everything that happened.

The picture is the same in the NASDAQ and Dow Jones percentage charts:

Dow Jones:

Be sure to read year-end-reviews and learn as many lessons as possible from 2011 as you prepare for making improvements to your strategies and tactics as you begin the new year – every day and of course every year is a learning experience!

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

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  • Theyenguy

    Bespoke Investment Group reports S&P 500 10-Day A/D Line Pauses Just Below Overbought Levels. This is as good as it is going to get. The S&P, SPY, is now turning lower as S&P Materials, MXI, and S&P Global Financials, IXG, and as the equal weight ETFs, RSP, RYF, RYE, RCD, RHS, RYH, RGI, RYT, RYU, RYM, show downturn. It’s hasta la vista baby to profitable investing in the S&P. Global currency deflation means unprofitable investing. The chart of the S&P, $SPX, shows that it is now in an Elliott Wave 3 of 3 Decline from its July 2011 high. The Elliott Wave 3 of 3 downs are the most destructive economic waves known to mankind, they for all practical purposes wipe out all wealth that was formerly built up on the 5 o5 wave up. This 3 of 3 wave down is best seen in the chart of the equally weighted RSP, which may go down in the text books as one of the most important investment charts of all time. Corey Rosenbloom in chart article shows today’s failure to rise higher with close below resistance of $1,260 which is the just under the middle of a broadening top pattern. Street Authority relates that when you see the broadening top, the market will eventually drop.     

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