I've been showing different posts on the dominant Andrews Pitchfork tool on the S&P 500, and I wanted to update the chart to show the recent price bounce off the mid-point line which was rather interesting. Let's take a look.
(Click for full-size image)
I'm just using the tool in its most basic form above, starting with the November 2008 lows, dragging to the January highs, and then dragging back down to the March 2009 lows to produce the classic pitchfork.
We see that the entire price rally has been roughly contained within the upward sloping angles of the Pitchfork, as seen mainly by the 50% median (midpoint) line and how price has snaked around this level.
You can watch median lines for support or resistance (short term) as seen by the ‘tests' of this level in both directions.
The most recent shallow retracements have found support just above the 50% line, and on the most recent pullback, price found support almost exactly at the middle line, as it appears price is still going to remain within the upward sloping angle throughout the whole rally.
Look to see if there's ever a break to the downside of the Median line, currently situated around 1,050 and rising, as that will potentially signal a change in market character just as the upward break from the down-sloping trendline that occurred shortly after I posted the May 13th down-trendline update.
