The S&P 500 has broken down lower overnight, after it formed a descending wedge.
The S&P 500 has had a strong talking point after pushing through the 2000 levels on the charts, with many predicting further bullish rises. The doomsayers have had a good crack at talking down the prospect of further rises in the S&P 500 and they may be right in this case after the recent solid breakdown of the bearish wedge.
However, with the S&P 500 you’ve got to take a look at the bigger picture and in this case there certainly is one on the daily/weekly charts. Which shows that there have been minor corrects each time on the charts.
The above chart shows the extent of these minor down trends, each one has been followed by a push back up higher. Something that many people should focus on when trading the S&p 500; where a down trend is not the bearish markets that people are looking for.
Instead, people should focus on the above trend line as an initial guide for further lows. It may not go this low or it might break through, even though a bear market would be some time away as there is plenty of space to go on further long term trend lines. For now though be aware that the US is recovering and there is still potential upside in the S&P 500.
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