S&P 500 Chart – August 14, 2009

I charted the S&P 500 ($SPX) after the markets closed on Friday, August 14, 2009 when the SPX closed at 1,004.09.

This chart has a lot going on and it all points to more uncertainty.  Stay tuned though, it’s interesting and should offer a solid clue of direction within the next few days.  I drew four trend lines, A through D. 

• Line A – shows the line of resistance the SPX hit again recently at the trend line of higher highs.  This line is going to be hard to cross.
• Line B – shows a different trajectory (not as steep and easier to cross) where another line of higher highs turned into support.
• Line C – shows the horizontal line that was resistance on a few occasions could be support if the SPX gets back down to it.
• Line D – shows the line of higher lows which looks far away now, but could be back in place sooner than some think.

I included three moving averages, 10, 20 and 50 day.

• The 10 day broke on each of the past four days, but Tuesday was the only day to close below it and on Friday the SPX managed to close on this moving average.
• The 20 day is close below Friday’s intraday low and happens to line up closely with the Line B mentioned above.  That combination could help to offer support.
• The 50 day doesn’t seem too close, but could be back in play before you know it.  It’s close to Line C mentioned above and Line D is headed to meet up with both of those lines soon.  If the SPX times it right, all three could come together for a triple area of support.

Another technical indicator I like to watch is Williams %R.  The 14 day period is starting to show some cracks in its strength.  I’d like to see two or three days of a break below overbought coupled with the 28 day period breaking at the same time to turn me more bearish in the short term.  That could happen this coming week.

This chart doesn’t give a truly clear picture of where the S&P 500 is headed next, but it does show we’re on the cusp of a big change coming soon and I expect it to be lower.  How much lower is hard to tell, but better buy-in prices are probably going to surface for a lot of stocks soon.