Andrews Pitchfork Update on SP500

I’ve been showing in past posts about the dominant “Andrews Pitchfork” chart on the daily S&P 500.  Let’s take a mid-October update of the  current Andrews Pitchfork style chart of the S&P 500.

Using TradeStation, we see that starting with the November 2008 lows, dragging the second point to the January price highs and then moving the final point to the (now famous) March 2009 lows, we see the standard 100%, 50%, and 0% lines that comprise the Andrews Pitchfork tool.

I’ve added additional percentage lines as labeled above to try to serve as trendlines as best as possible.

I’ve also shown prior Pitchfork updates in the following posts which you can look back and see how we’ve progressed:

July 28th S&P 500 Update (showing the Fibonacci numbers for the Pitchfork which are still valid)
June 18th on the S&P 500 (which show the ‘standard’ Andrews Tool)
May 13th S&P 500 which shows a Downward Pitchfork from the Market Highs

What we’re seeing now is that the market is testing the underside of the 70% Andrews ‘tine’ line.  The more popular “75% Tine” line is just slightly above where I drew the 70% line.  Most analysts prefer to use the 25%, 50%, and 75% lines when studying the Andrews tool, though you can also get interesting results off the 38.2% and 61.8% Fibonacci levels which is a non-traditional usage of the tool.

If anything, looking at the S&P 500 through the lens of the pure Andrews Pitchfork tool adds some structure to the otherwise never-ending price rise off the March lows.

We see that the market is moving within these gridlines in a stable angle of ascension.  This helps provide context beyond what we see in most charts – we’re pulling back to look at price structure by itself.

Let’s keep watching the market structure to see any sign of a positive break above the 70% line which would be quite a development, and if not, then watch the lower trendline levels for signs of further downside potential.

Corey Rosenbloom, CMT
Afraid to Trade.com

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