After yesterday’s plunge, I have seen many with a bearish view discuss the break of trendline support, specifically on the S&P 500 Index (SPX). One vulnerability to chart reading is if you have a bearish or bullish predisposition, you can make the interpretation of that chart fit your view. I have had a bullish view for months, although I called for choppy price action a few weeks ago. That said, my chart work tells me to “stay pat” with my bullish view, and one of the factors is that major indices, such as the S&P 500 Index (SPX), S&P MidCap 400 (MID) and Russell 2000 Index (RUT) remain above trendline support. I discussed the MID in detail yesterday real time as it was testing support. Perhaps my time frame is different than those intepreting the charts bearishly, and I am open to the fact that the technical backdrop could change unfavorably for me. But for now, I don’t see a breakdown that some technicians are referring to. See the charts below.
SPX – Trendline Support just below 1,400; MID around 970; RUT around 810