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2019issue C1320-21

Monthly S&P 500 false-break versus the decade trendline

A January 2019 monthly S&P 500 map recorded a false-break-reversal after the index failed to hold above the January 2018 high of 2872.87, then rebounded into the 2631-2700 band. Editorial reading keeps the 2009 trendline open as the primary-trend while testing a specified shorter-horizon breakout.

  • Keep the longest intact trendline on the monthly map open as the primary-trend even when a shorter swing looks like a breakdown.
  • Treat a failed hold above a prior high, followed by a break of older lows, as a false-break-reversal rather than as an automatic change of trend.
  • Specify in advance that a lower-timeframe close through the 2631-2700 resistance-zone would count as breakout confirmation of another selling wave.
  • Read the 12-period moving-average only as a quantitative baseline beside that rebound, and leave a later test of the 2009 trendline as the contingent path if nearby resistance fails.
Entries in this reading3 entries
Current trackTrendline128 readingsBreakout confirmation172 readingsMoving average449 readings

What the monthly map recorded

After a weak open, US indexes finished January 2019 higher as trade-talk hopes rose and policy rates were expected to pause after four increases in 2018.

The monthly S&P 500 map recorded a false-break-reversal after the index failed to hold above the January 2018 high of 2872.87 and then broke older lows.

By late January the index had rebounded into the 2631-2700 band that marked the origin of the preceding decline, and that band was treated as potential resistance.

Monthly S&P 500 false-break versus the 2009 trendline

A trader should see a still-rising 2009 bull trendline holding while price failed to stay above the January 2018 high and then bounced back into the 2631–2700 origin of the prior drop. Monthly closes were read off the eSignal candlestick map; the 2872.87 high and the 2631–2700 band are the levels named in the article.
A trader should see a still-rising 2009 bull trendline holding while price failed to stay above the January 2018 high and then bounced back into the 2631–2700 origin of the prior drop. Monthly closes were read off the eSignal candlestick map; the 2872.87 high and the 2631–2700 band are the levels named in the article.S&P 500 · monthly · 2008-01-01T00:00:00.000Z to 2019-01-31T00:00:00.000Z

Closes are approximate readings from the monthly candlesticks, rounded to the nearest 10 points except for levels the source stated in the text. The 12-period SMA is the green overlay on the same map.

The shorter-horizon breakdown test

A lower-timeframe breakdown around 2631-2700 was specified as breakout confirmation that could open another selling wave in February 2019.

Editorial: a breakout is a close through a defined swing, range, or trendline. It is treated as confirmation only after the reclaim or failure of that level is specified in advance. Here the named condition is a close through the 2631-2700 band, not a later story about the failed January 2018 high.

Editorial: that band is the resistance-zone in this drill, a band of prior supply at the origin of an earlier decline, where a rebound may stall unless buyers reclaim it on the active timeframe.

The intact primary-trend

A bullish trendline drawn from 2009 was still shown as intact on the monthly chart, with a later test of that line framed as a contingent path if nearby resistance failed.

Editorial: a trendline is a straight support or resistance line drawn through successive swing points so a later test or break can confirm or reject a directional hypothesis. The primary-trend is the longest intact directional structure on the chart. It can remain valid even while intermediate swings look bearish.

A moving-average baseline on the same chart

The same monthly chart plotted a 12-period simple moving-average as a longer-horizon baseline beside the rebound into 2631-2700.

Editorial: a moving-average is a rolling mean of closing prices over a fixed lookback. It marks a quantitative baseline on the same chart as the price structure. Read it beside the resistance-zone. Do not let it overwrite the trendline hypothesis or the specified breakout.

Why both sides could stay active

Apple guided for as much as a 10 percent revenue decline in the fiscal quarter ending March, citing weaker handset demand in China.

Softer US growth and weaker earnings were cited as reasons both sides of the market could stay active in 2019, while still-easy policy abroad was described as a limit on downside.

Editorial: that mix is archive context for why a shorter-horizon selling hypothesis and an intact primary-trend could both stay on the map. It is not a verdict on which hypothesis was later correct.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
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All readings on this track · 53 readings
  1. 1984Constructing the slow stochastic from a five-session range
  2. 1985Gold-proxy trendlines and a January support base
  3. 1988Construct a five-week new-highs total as a breadth chart
  4. 1988Stacked channel, trendline, and moving-average warnings in 1987
  5. 1989Auditing fifth-wave counts with equality, Fibonacci, and trendlines
  6. 1990Money-fund maturity as a companion Eurodollar chart
  7. 1990Constructing wave targets from ratios, triangles and trendlines
  8. 1992Nested time frames for trend and channel signals
  9. 1992A pre-trade checklist for trendline breaks and loss limits
  10. 1992Bond-fund timing inside trendlines, retracements, and dual averages
  11. 1992Two-point trendline construction from rise over run
  12. 1993Disposable chart ratings from confirmed level tests
  13. 1993When trend channels define fair value after dislocations
  14. 1993Valid trendline anchors for three-part reversals
  15. 1994Pairing stochastic divergence with trendline invalidation
  16. 1995Constructing measured targets after trendline breaks
  17. 1997A three-part pullback plan with RSI, Fibonacci retracements, and a tight trendline
  18. 1998Rule-based Trendline construction for testable entries
  19. 2000Constructing trendlines, breaks, and role reversal
  20. 2000Constructing speed resistance lines from trend extremes
  21. 2000Nasdaq tech cycle stages with a 15-day average and trendlines
  22. 2002Two-session candlesticks that test support, resistance, and trendlines
  23. 2002Constructing Fibonacci ratio grids from a peak and a trough
  24. 2002Evaluate trendline geometry before trusting a breakout
  25. 2002Trendline, volume, and breakout hypotheses versus cycle-end stories
  26. 2003Writing the long S&P 500 trendline and cycle junction as one hypothesis
  27. 2003A three-event trendline reversal checklist
  28. 2003Reverse-engineered Relative Strength Index price curves
  29. 2003Two-anchor trendline construction without cut-through
  30. 2004Treat a 15-minute e-mini stair-step as congestion under a daily lid
  31. 2005A 50-day average, a trendline break, and an open barrier flip
  32. 2005Matching a forty-day average to a crude trendline
  33. 2006Constructing a relative spread-strength oscillator for staged cycle confirmation
  34. 2006Constructing a log-change probability line for trend and range rules
  35. 2007Linked cross breaks as dollar-pair filters
  36. 2007A case study in support, resistance, and trendline role reversal on currency charts
  37. 2007Reading trendline breaks in a housing-sector case
  38. 2007Constructing replaceable trendlines for break signals
  39. 2007Reading trendline breaks before the mechanical signal
  40. 2007Trading choppy forex trends with channels and Fibonacci breaks
  41. 2007A stacked hypothesis from wave, trendline, ratio, and candle
  42. 2008Exit rules before entry: trendline, support, and stops
  43. 2008Capitulation headlines need trend confirmation
  44. 2008RSI divergence classes, ratio thresholds, and trendline tests
  45. 2010Support and resistance as falsifiable chart hypotheses
  46. 2012Reading a 2012 software directory as a breakout and channel case study
  47. 2013Treat a currency position as a regime, then map shared levels
  48. 2014Evaluating trendline swing size per market
  49. 2018Intermarket regime stress and the January 2018 trendline break
  50. 2018Weekly and daily Stochastic oscillator construction on a single daily chart
  51. 2018Constructing trendlines, support, and breakout targets from crowd exits
  52. 2019Trendline break and Fibonacci retracement as a falsifiable outlook check
  53. 2019Monthly S&P 500 false-break versus the decade trendline
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