Chart Talk 02.03.16 {S&P 500-Long Term}

Here's a weekly chart of the S&P 500 going back to 2000.  Chart comes to us from TradingView.com.  You can double-click on the chart to make it larger.  A couple of further points.  

1.  The green line that runs along the whole chart and shows where the market topped out in 2000 and again in 2007 is also significant multi-year support for the market.  I don't think I was clear about that in the chart.  This is a pretty good example of the old Wall Street Maxim, "Price Has Memory".  Also I think it's important to keep some perspective on how far this market has come since the dark days of 2009.  Keep in mind to that better than 180% gain also must be added all those dividends in the index which have averaged around 2% per annum all that time.  Interesting to me always is that for most of that time the 10 year US treasury has averaged somewhere between 2-3%.  Basically you could have owned the S&P 500 index, received all that gain {while paying virtually no taxes if you held on to the index as represented by an S&P 500 related ETF} and been paid in dividends something similar to the US 10 year.  The 10 year by-the-way also has to deal with potential income taxes and inflation, possibly indicating a break-even proposition at best.    The downside is that you have to stomach the volatility.

2.  The green descending line in the top left corner is slowing intersecting with that longer term trendline shown running up towards that same top left corner.  One of these will ultimately be violated.  Price is running out of room in that regard.

3.  I didn't add these above because the chart was already crowded but if that blue line level of support is violated to the downside then we have to look where prices stabilized at lower levels in the past.  The next level is around 1,750 and then a nice rule of thumb is 50 points down each time until we get to that long term support line of 1,550.  I am not saying that is going to happen!  I'm just telling you what money flow analysis suggests.

4.  Doesn't that highlighted level of resistance looks much more massive when seen on a weekly chart?

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.