This Friday’s closing price of 1,649.60 points on the S & P 500 completed a Key Point Reversal high on the weekly chart. If this is not reversed this following week it likely means that US stock prices are heading down, at least in the Intermediate term.
S & P Weekly Chart- Closing price Friday May 24/2013- 1,649.60 points.
These key point reversals are reliable indicators of a change in the price trend. I have shown 4 key point reversals on the chart shown above. The latest one is a key point reversal top. This was indicated when the S & P 500 made a new high price in the week ending May 24th, 2013, of 1,687.16 points, which was almost 20 points above the previous week’s high. However, the closing price on Friday May 24th was 1,649.60 points, which was about 18 points below the closing price of the previous week.
Not all price trend reversals are indicated by price key point reversals, but when you get them they do, with a high degree of confidence, indicate a trend reversal. They are normally negated only if in the following measuring period (Day, Week, Month), there is another reversal contrary to the one already initiated. For the S & P 500 this would require a new weekly price low this coming week below last week’s low of 1,635 points and a Friday, May 31st, 2013, close above the Friday May 24th close of 1,649.60 points.
The greater the price difference between the two adjacent measuring periods, the more confident we can be in anticipating the trend reversal. In the case of this S & P reversal the price differences were equivalent to about 150 to 200 points on the DJIA. That’s quite a large price difference.
Let’s see what this US shortened trading week brings.