Which Direction for the S&P 500 ?

Well the S&P 500 is making an attempt to push through the 956 resistance line and is currently nestling at 954. We will know by the end of this week if the Market is ready to advance or not. All eyes are on the S&P 500.

But which way will it go?

Take a look at the weekly chart below.

TeleChart2007 chart courtesy of Worden Brothers, Inc.

This is a weekly chart of the S&P500. In the top pane I have the price & the Worden Brothers Incorporated TSV indicator (Time Segmented Volume), an indicator I really like to use for its consistency and strong predictive quality.

The pane below shows the price Rate of Change (ROC)

The key points noted on the Chart are

1. The TSV line was strongly divergent in 2007 / 2008 correctly predicting decline.
2. Now TSV has advanced higher showing a positive divergence with price.
3. ROC broke through a long term trend line in February March 2009 and has since risen strongly above the 0.00 line.
4. At the 2009 bottom ROC was divergent with price, indicting the bottom was hit, and the prices would begin again to increase (which did happen)
5. Finally ROC is now also positively divergent with price since July 2008.

What does this tell us. TSV and ROC are indicating a move higher from here, not lower! As we know this is a pivotal point in the markets progress, this is very important.

I believe the market will go higher from here, according to these indicators. However any very bad news or external shock to the system could change this. Also I will be remaining in cash until I see the resolution.

You do not want to be the wrong side of the market after all ?