Quote from inandlong:
The 100 is common, but less quoted than the 50 and 200. And yes that support area is right in line with the confluence of the 20, 40, and 50 sma's.
The question needs to be asked, "why did price stop advancing in June?" I think the answer is found in the story told by the weekly and monthly charts. We are trading at September 2001 levels right now. The high for this month is 1040.29. The monthly close for Sep 01 was 1040.94. That is significant.
For all the people who jumped in bargain-hunting then and have held their positions, two full years later they are finally breaking even, if they are lucky enough to be in something that tracks the SP500 fairly closely. So two years later, having held a loser, and being fortunate to be at breakeven finally, and given the "bubble" debacle still fresh in their minds, what do you think a lot of these people are doing? I think they are selling. That period is going to be a natural resistance level.
Now if all this money is selling, and price has held its level, who is buying? And, if the chart nkhoi posted awhile back is foretelling, and we get a measured move higher from this summer's channel, then 1150-1160 is in the picture. And guess what sits at 1157 right now? The weekly 200sma, with the monthly 50sma at 1167!
MA's are like magnets. They represent the mean. Lord knows we all just want to be normal.
Nice post inandlong.
