Long-Term Bull Market Still Alive, Trend Support Is Where?

09/03/2015 7:00 am EST

Focus: STOCKS

For the benefit of long-term bulls who like to play long-term rising channels,Chris Kimble, of Kimble Charting Solutions, takes a technical look at the chart of the NYSE Composite on a monthly basis—dating back to 1965—to illustrate how the very long-term bull market is still in play.

The S&P 500 (SPX) (SPY) is now down around 7% on the year. Is the very long-term bull market still in play? Yes it is.

The chart below looks at the NYSE Composite on a monthly basis, dating back to 1965.

chart
Click to Enlarge

As you can see, since the mid 60s, the NYSE composite has remained inside of rising channel (A). The last time the top of the channel was touched was in the late 1990s and the last time the bottom of the channel was touched took place back in 2009.

Despite the quick downturn of late, this long-term rising channel remains in tack.

Some things that caught my attention in the above chart.

  • The NYSE hit mid-range parallel resistance a few months ago and of late has broken below support off the 2009 lows.

       b) Monthly momentum reached lofty levels recently (last seen in 1987, 1999, 2007, and now) and momentum has started to turn lower. It could matter that monthly momentum has been creating a series of lower highs over the past 17-years.

From a 30,000 foot view, the 40-year rising bull trend remains in tact.

Now that the 2009 support has given way, which is something to respect, where does long-term support come into play?

  • The last time the NYSE touched the bottom of this rising channel was back in 2009, as it stopped on a dime at support, during the financial crisis. The support line now comes into play at the 7,666 level, which is around 20% below current prices.

If you are a long-term bull and like to play long-term rising channels, you should feel good that the long-term trend is still up and 40-year support has not been broken.

These would have my attention if you are looking to make some shorter-term observations/decisions…support is a long way away, 6-year support has been taken out recently and monthly momentum is still lofty and has made a series of lower highs over the past 15-years. Some might view these lower highs as a divergence against the long-term trend and a potential negative for the time being.

By Chris Kimble, Founder, Kimble Charting Solutions

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