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Emotional Roller Coaster: The S&P 500 Diagrammed


Human behavior and the S&P 500.

MINYANVILLE ORIGINAL Last week, it was once again proven that the incredibly tough trading environment that has categorized the last eight weeks was still upon us. As has been the case, the market sold off sharply for multiple sessions, and then single-handedly made up all of the losses and closed the week on a positive note. This all happened within one trading session -- in this case, last Friday.

The uptrend from the start of June to this past week is intact, but the waves between peaks and troughs may be the most disconcerting price action I have ever witnessed. The common thread that has remained throughout this constant swell in the seas has been the old faithful 21-day moving average line, which remained positive in its slope throughout.

As the downtrend line depicts, resistance at current levels may just be an area for profit taking (price retracement). Beware of current upside momentum, which is difficult to fight. Regardless,1395.00 is key resistance, followed by 1408.00.

At ChartLabPro, we wanted to present a favorite chart of ours that represents human behavior when it is applied to the S&P 500 (^GSPC). This is a good illustration of just how easy it is for humans to get emotional about the markets, and then buy and sell at the wrong time. If one were to believe in this analogy, we have yet to approach the excitement phase.

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No positions in stocks mentioned.
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