Yearly charts usually get far less attention than their shorter brethren, but they still have useful lessons to give smart investors. MoneyShow's Tom Aspray analyzes the yearly trends for these four major asset classes to point out what levels you should be watching as we move into 2013.
Some investors, as well as quite a few traders, might be surprised to learn that many successful long-term traders pay considerable attention to the yearly price ranges of the key markets.
This is particularly true of a trader’s favorite markets, as many have these data points memorized. With just over one month left in 2012, we are able to see which markets have significantly changed since 2011.
As a year progresses, the opening range gains additional importance. This price gives one a broad view of where demand exists, as if prices are below the year’s opening, most who bought during the year are now holding a losing position. This creates a level of resistance or supply above the market.
A higher year-to-year close is also a big-picture positive, just like a lower yearly close can be a measure of downward momentum for the coming year. I think a closer look at the yearly charts will demonstrate why they are important, and can also help you identify the key levels for stocks, gold, the dollar index, and crude oil as we head into the new year.
Chart Analysis: The yearly chart of the S&P 500 covers both recent bear markets, 2000 and 2008. In 2000, the S&P closed the year lower at 1,320.28, but well above the year’s low of 1254.57.
- In February 2001, the S&P 500 dropped below the 2000 low, closing the month at 1,239.
- In September 2001, the S&P 500 had a low of 1,040.94, so the break of the year’s low in February provided a good warning. By September 2002, the S&P 500 had dropped as low as 768.63.
- At the end of 2007, the S&P 500 closed at 1,468.36, and the year’s low was 1,363.98. This low was broken in January 2008.
- The S&P closed the year at 903.25, and of course eventually made a low in March 2009 of 666.
- The S&P 500 closed higher in 2009, 2010, and 2011. A 2012 close above 1,257.60 does look likely this year, which will make the 2012 low at 1,258 a key level to watch.
- For the Spyder Trust (SPY), the 2011 close was $125.50, and the opening level for 2012 at $126.43 has been the year’s low.
- The yearly on-balance volume (OBV) has been above its WMA since 2004.
The yearly chart of the continuous gold chart shows the spectacular rally since 2002, as that year’s close at $348 was above the prior four-year highs. This was clearly a major breakout, and since then gold has closed higher every year.
- The December gold contract is currently trading near $1,726, which is about $160 above the 2011 close of $1,566.
- The 2011 close and the 2012 low of $1,526 will be important levels as we head into 2013.
- The all-time high of $1,973.24 was made in 2011, and a move above the 2012 highs of $1,798 will signal a move toward these highs.
- For the SPDR Gold Trust (GLD), the 2011 close was at $151.99, with a high of $174.07 and a low of $148.53.
- By the end of 2004, the yearly OBV for Comex gold was clearly above its WMA, and it looks ready to make new highs again in 2012.
- The monthly OBV (not shown) has confirmed each new high since 2002, which has kept my major trend analysis positive.
NEXT: Yearly Trends in the Dollar and Oil