SPX - Market Top B 2006-2009 NP

Today, I will answer your questions and analyze the 2007 market top and show the indicators used to signal it.

To help answer that question, I designed a chart using just three items, the value of the SPX (Standard & Poor’s 500), a trend line and a momentum indicator. There’s no need to make it complicated.

Per my chart, the SPX continued to make new highs in until hitting 1576 in October 2007. After the price crossed down through the multi-month trend line (purple slotted line), the first sell signal hit (Point A).

In June 2008, a second sell signal hit after the price failed to make a new high and traded lower than the previous month (Point B). In the lower box, I feature a highly accurate momentum indicator showing as the SPX continued to rally and make new highs, the institutions were hitting the sell button, exiting their equity positions.

First, are you aware of the different tools available to signal market tops?

Second, are you tracking your holdings to see if they are topping?

Third, are you tracking the market to see if it is topping-now?

Fourth, if not, why?

Wall Street makes its money with us being in the market. We make our money with what we own and when.

Next week, we will examine the current market action to see if we can pick up clues before the next downfall.

Plan your work, work your plan, and share your harvest!

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy (Davidoengland.com) and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Your decision to buy, sell, short or hold any investment product is a direct result of your decisions, free will, and research. For questions-send to thetraderseye@gmail.com.

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