Price Time Volume Investing

The SP500 Index (SPX) has followed a clear geometry by respecting the angles off the 2002 market bottom. The support line for the March low should serve as support into October. Price may break this line and will be a good place to go long - with a stop underneath a reasonable amount. The third break of this line would be very bearish long term.

Chart courtesy of Stockcharts.com

A couple other time cycles that could have been traded (were we watching then) :

• The 50/50 point of the first range square ended wave 3 (beginning of 2004)
• The time square ended with price returning to the 50% price level (April 2005)
• Price tried one final retest down at 150% time before making the big run to 200% time (July 2006)

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Using the range from the big leg of the 1990s bull market starting in 1995, the 1:2 Gann Angle has served as support. Notice how the bear market ended in 2002 at 50% of the time of the bull market run. And also notice that the right shoulder of the 2007 market top occurred at the 150% time cycle (and at 100% from the bear market bottom). Price broke through the 1:2 line but recovered relatively quickly. I expect the move down into October to do the same if a bull market is to follow.

Post Modified: July 3rd, 2008 at 12:27 am

Tags:   Gann Angle Fan · Square of Range · Standard and Poor's 500 (S&P500)No Comments