I was chatting to a trader friend at the end of last week and he was telling me that many were now looking for a major bull breakout on SPX from here, and I think I'll show in my post today one strong reason to think that's very unlikely to happen. That reason is based on what has been happening at the weekly upper band over the last three weeks, which historically has been a very solid indicator that short term upside is limited and that a minimum 4%+ retracement is close.
Some of my longer term readers will recall me writing about these before, and if you want more detailed stats on these then this post that I wrote in November 2013 lists these in detail. You can see that post here. The short version is though that historically these weekly upper band punches are generally followed within a few weeks, and without much further upside, by a minimum 4% retracement, though there are several instances of retracements much larger than that in the 10% to 20% range. Significant bull breakouts close to these punches before such a retracement are rare, as are major tops, so there's not much here for either the super bullish or the super bearish. SPX weekly chart:
A couple of announcements to make today. The first is that Stan and I are doing our monthly public Chart Chat on Sunday and if you have any interest in whether a wide range of equity indices, forex pair or commodities are likely to be going up or down over various timeframes, then you should come. If that isn't interesting but you just enjoy top quality TA you will also be welcome. :-) You can sign up for that here.
The second is that as part of our overhaul of the website at theartofchart.net we have also now introduced a 14 day free trial for our triple play package that covers everything that we do from the daily videos and futures charts to the longer term charts and twice weekly chart chats, and if you are interested in trying that out you can find that here.