Updated Arc Patterns on the Daily US Equity Indexes Reference

Apr 8, 2010: 12:25 PM CST

In keeping with the last two update posts on the “Rounded Arc on the NASDAQ April 9” Index (short-term) and Rounded Arc on NASDAQ from March 30, I’ve received a few comments asking about the larger pattern of a rounded arc not just on the NASDAQ, but other equity indexes.

And you’re right – there are large-scale arcs on all US Equity Indexes (Dow Jones, Russell 2000, NASDAQ, and S&P 500) starting with the March 2009 low and moving one-year later to the present.

Use this post as  reference grid for what the current arcs look like – as well as a reference on a pure price approach to the 2009 major Rally.

Click on all charts to view them full-size.

First, the Dow Jones:

The Dow Jones actually has an internal arc as drawn, connecting the smaller swing lows inside the larger formation.

Unlike the other indexes, the Dow Jones is the only one to remain reasonably within the boundaries of the arc.

Next, the NASDAQ:

The NASDAQ has a clear arc pattern (as a reader mentioned), but price has burst outside the dominant arc recently, which is either a sign of exhaustion, or that momentum is picking back up to invalidate the arc pattern.

Any return back inside the arc should be expected to take price down to the 2,200 level again, but let’s see if buyers/bulls can support price above the upper arc at the 2,400 level – that would be interesting.

On to the S&P 500:

Unlike the Dow, I actually combined the two arcs into a broadening arc.

You actually can draw the lower arc as I did on the Dow Jones and then draw the middle arc to connect the smaller swings.  That would take care of the ‘thrust’ outside the lower boundary in July.

Even so, it shows that thrusts outside pattern boundaries are often met with a return back intside the parameters of the pattern… suggesting that if sellers crack price back under 1,150 (the upper part of the arc), then we’d expect to see a move back down to the 1,100 level.
Finally, the Russell 2000:

While the Russell had clear trendline boundaries going up, the small-cap index is also breaking solidly above the upper boundary like the NASDAQ.

Let’s see if buyers can hold above the pattern high at the 630 level, but if not, let’s see a move back down to the 600 area.

Like trendlines, the goal of an arc – which is really just a curved trendline – is to touch as many price points as possible.  They’re not meant to be perfect or magic – just a way to show sloping and evolving trendlines that change as the market changes.

I’ll continue to keep you posted on any major changes in these structures.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

13 Comments

13 Responses to “Updated Arc Patterns on the Daily US Equity Indexes Reference”

  1. tgarfield Says:

    Have you read the “rare wave structure” in EWI april forecast? If so what do you think?

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  3. asc Says:

    Just wondering if the rounded arc will be seen as a regular straight line if you see the chart on a logarithmic scale ?

  4. asc Says:

    Just wondering if the rounded arc will be seen as a regular straight line if you see the chart on a logarithmic scale ?

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