Monday’s Upward Diagonal & A New Trend Line – 06/20/11 © ™

The first chart shows the NYSE Composite since October 2008.  The trend lines on this chart have produced some significant turning points.  Presently we have stopped on the lower trend line that connects the March 2009 bottom and the June and August 2010 bottoms.  The upper trend line originates with a peak in November 2008 and has had 5 contacts points, 1 in 2009, 2 in 2010 and 2 in 2011.  It will be interesting to see if the market will turn up from contact with the lower trend line.

The trend lines on this chart form a rising wedge, which is normally bearish.  To nullify the wedge the market needs to breakout above the upper trend line.  But a break below the lower trend line “could” signal the beginning of a major down trend.  There is a possibility that any downside breakout could stop on a trend line that is parallel to the upper trend line and contacts the June 2010 low.  If true, this would be a normal retracement of a major advance.  Upon a breakout below the lower trend line I would favor the viewpoint of stopping on a parallel line. I believe it’s too early for a new bear market (see weekly update under “Very Long Term”) but one must always be alert to the possibility.

CLICK ON THE CHARTS TO ENLARGE

06-20-11, NYSE COMPOSITE, DAILY BARS, SINCE OCT 2008, TREND LINES

The second chart shows possible upside targets should the market resume its uptrend.  The trend lines are called an Andrews Pitchfork.  It has had multiple contact points on every line except the upper trend line.  The upper trend line is based on an imaginary point that produced desired results on the other trend lines.  It is a theoretical work and would only have possible use if the market were to resume its advance.

As I have said before this market has been just like the Energizer Bunny, it keeps going and going and going and going . . . .

06-20-11, DJ INDUSTRIALS, DAILY BARS, SINCE MAR 2010, TREND LINE

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