Has the S&P 500 Changed?

While many financial press articles analyzing recent market activity and possible near-term movement fall into the category of ‘the sky is falling', an analysis of the S&P 500's chart shows there isn't a lot to be worried about. The S&P has been cycling up and down, forming an ascending channel.

The up cycles have been averaging about 2 weeks, and the down cycles have been averaging about 2 weeks. On Thursday, the S&P paused, with buyers matching sellers. Volume was average.

While the most recent pullback has lasted only 4 days, so far, yesterday's action suggests the index may bounce or even start a rebound today.

The only point of concern is the lower high set in mid-March. However, a couple of lower highs in mid-January didn't precede a large drop. At this point, the most likely action of the index is to rebound towards the top of the channel.

Of course, this is an analysis of only the technical picture. If numerous corporate earnings pre-announcements come out preparing us for bad news with April's earnings reports, the mood of the market could quickly change.

Seasonally, the S&P 500 typically rises from here. It has the highest success rate over the next 15 weeks, having logged gains in 26 out of the past 35 years.

The 15-week period is interesting. It happens to correspond with the start of Q2 earnings releases in early July. It is 2 weeks to the start of Q1 earnings announcements. The S&P 500 has a 60 to 66% record of gains over the next 2 weeks, leading into the start of Q1 announcements. But it typically has kept going on into Q2 earnings and the start of summer.

I will be watching the S&P's action in relation to the channel I drew above. For me, nothing has changed in this market until the S&P 500 breaks out of that channel, especially if it is on high volume. Until then, it remains an upwardly-biased market.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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