an tSionna 02.5.09: Might Be Something, Might be Nothing!

This might be something or not. But I spent some time today reviewing all my charts in which I hold investments for clients. Most are still putzing along in the same trading ranges we've endlessly chronicled over the past few months. But I noticed one thing today that I thought I'd point out.

This is a price chart of the S&P 500. Notice the price action has now pushed this index up against this descending trendline {Red line} that was first established back @ the end of August. Now this pattern is usually considered a negative chart pattern due to the descending nature of the trendline. Theory holds that prices will continue to fail at these lines and ultimately will be pushed below resistance levels previously established. That may happen here as well. Certainly failure to penetrate this line soon would be viewed negatively by some investors. But if stock prices can move decisively through this line then probability would suggest that in this instance the S&P 500 could work at least towards its upper band of resistance. That band is currently about 7% higher from where we are now. I see lots of charts that are showing this pattern right now. Almost every ETF equity index I looked at is showing this pattern. Stocks are currently oversold so that could be another upside catalyst. There is also the prospect of final passage of the stimulus package and apparently Treasury is going to unveil its banking plan over the weekend. Stay tuned!

*Long S&P related ETFs in client accounts.