Updating Our Market Structure Color Charts for SP500 Dow and NASDAQ

Aug 12, 2014: 9:32 AM CST

Let’s take a quick moment to update our “Market Structure” Color Charts for the Big Three US Equity Indexes.

We’ll start with the S&P 500:

When we view “Market Structure,” we’re simply studying the sequence of price highs and price lows as it creates or builds a trend.

Uptrends contain a “higher high/higher low” price structure while downtrends create the opposite.

We can also compare volatility in terms of sideways consolidation phases or trending phases (along with the angle of upward movement).

For now, “Structure” is bound between rising parallel (or even compressing) trendlines as price continues its upward pathway fueled by stimulus.

The key level to watch now – as has been the case since late 2012 – is the test of the lower rising trendline intersecting 1,900.

The “Structure” would continue with a bullish rally up off this level and would be “broken” on a trigger-breakdown under 1,900.

Trend Structure should be assumed to continue unless proven otherwise with a breakout.

Structure is similar in the Dow Jones Industrial Average:

Unlike the S&P 500, the Dow Jones shows compressing tredlines intersecting the current 16,000 lower region and 17,000 upper trendline.

The key focal point will be 16,000 (to make it easy) for a “support bounce” or “support breakdown” price pathway.

The NASDAQ Index shows a similar but altered Structure:

While the NASDAQ took a more leisurely upward structure from 2011 to 2012, price accelerated in (somewhat) expanding trendlines that take us to the current level near 4,400.

Also, unlike the Dow and S&P 500, the NASDAQ is not intersecting its lower structural level (at least as drawn to incorporate the 4,000 swing low).

Bookmark this page and reference it as a current viewpoint on “Market Structure” and potential future price pathways (which thus give rise to real-time trading strategies depending on whether the structure “continues to build higher” or else fails and breaks apart).

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Comments Off on Updating Our Market Structure Color Charts for SP500 Dow and NASDAQ

Comments are closed.