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Breaking Down the Weekly SPY Swing Chart

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Gann said to key off the weekly chart to determine trend.

He also keyed off increments of 6 to 7 weeks with a turning point often coming on the 7th bar.

So, the 7th week which is basically 45 calendar days, is important.

This week was the 7th week from the June low and the SPY stabbed down to test the high of the low bar week.

While the S&P/SPY had proved below the high of the low bar week prior to this week, this is the important 7th week from the early June weekly signal bar -- the weekly Train Tracks buy signal.

Note the weekly Train Tracks sell signal in early May on the SPY swing chart from this morning’s Daily Market Report:

From the April highs of the year, the market sold off 60 calendar days into early June.

From early June to early August will be a symmetrical 60 days.

The S&P/SPY is probing the level of the weekly Train Tracks sell pivot from early May.

This ties to the 1371 high in 2011.

Is it possible the S&P will recapture this level on the important Friday weekly closing basis?

If so, this could signal higher.

That said, the key will be behavior if the Weekly Swing Chart turns up next week on trade above this week's high.

That should be easy to do as the S&P looks set to close at/near session highs unless the wheels come off.

Given that every turn down and turn up of the weeklies has defined a low or a high soon in terms of time and price since late May/early June, the behavior following this 7-week cycle from the low and this important 1370 level will be critical.

If the action is constructive, it implies higher prices with an eye toward the 30-year (360 month) anniversary of the August 12, 1982 bear-market low and the end of August's 144 Fibonacci month anniversary of the test failure return rally in 2000.
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