In the March 17 edition of Schaeffer on Charts, I focused on what I saw as a critical market level that was immediately at hand - the 160-month moving average of the S&P 500 Index (SPX). In my concluding remarks, I stated:
"Yesterday, the SPX closed at a new recovery high of 1,159, just 3 points below its 160-month moving average. A daily close above this moving average would be encouraging, but even more encouraging would be a close above this level at month's end. While there are many pieces to this market puzzle ... a close by the SPX above its 160-month moving average on March 31 would cause me to believe even more strongly that we are in sustainable bull market mode. We're going to watch this level carefully, and I'd suggest you do this as well."
On March 31, the SPX closed at 1,169, clearing its 160-month moving average by 7 points. This was not exactly a "huge clear," but the market has continued to press steadily higher and we are currently about 20 points above this benchmark. And, at least for now, we are shaping up for another "clear" in April.
Note that the last time the SPX closed above its 160-month was in September 2008, and the break the next month was followed by a major downside deluge. While I'm not suggesting that the upside penetration will evoke a similar reaction higher, I believe this could be the ticket to an assault in the coming months on what could well be the next major S&P resistance level - 1,332, the doubling point from the March 2009 low. At such time as we reach that point, it will be very interesting to sentimenticians to see if the bearish constituency will throw in the towel or will – if you'll pardon the expression – "double down."
Discuss this article:
"THANKSFOR YOUR 160 DAY S&P CHART BUT COULD YOU EXPLAIN IN A FEW WORDS WHY, 160 DAYS RATHER THAN THE CONVENTIONAL DAY, WEEK, MONTH & YEARS???? I KNOW YOU & YOUR KNOWLEDGEABLE STAFF ARE IN THE KNOW, BUT I NEED TO READ UP ON CHARTING BECAUSE I MISSED SOMETHING. THKS, STAN" Respond
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