Which way is the market going?

And the answer is – drumroll...reminiscent of the academy awards when the best picture awards are being anounced – depends. The direction of the market depends on the time frame that you are looking at. For most of us our time frame of reference is our lifetime or less. The less is measured in years, months, weeks, and days. Lets take a look at the market over the last 10 years and then zoom in.

This first chart is a 10 year monthly chart of the S&P500 with a 12 Simple Moving Average(SMA) in blue. I like the 12 SMA on this chart as it is recommended by Martin Pring who is a great technical analyst. His web site is here. As can be seen, the direction of the market has been Up, Down, Up, and Down again over the last 10 years. I have drawn the market direction onto the chart. Click to enlarge.If we zoom in and look at the last 3 months we have changed our perspective with regard to time and we have a slightly different picture, although not really as the prices below are also in the chart above. Here we see a 3 month weekly chart of prices and I have drawn a single line to represent the low of the last 4 weeks. The market made a low on the chart the week of 03/17 at approximately the 1260 level. For the last 4 weeks the market has gone Up, Down, Up, and Down again. In other words.....sideways. Drawing lines helps make the picture more understandable. If the market breaks the line drawn in below chances are the market will go lower. In the prior post I mentioned we are up against the 200 SMA on the daily chart. We need to break above this level, currently 1426, to go higher. Click chart to enlarge.