Charting the S&P 500: A New Year Brings a New Look at the Trend Line

And that's a wrap on 2023, a great comeback year following a truly awful 2022. The stock market finished with very strong momentum as the seasonal trends played out. The low of the year was in late March while an interim low was established in late October. On the longer time frame, that action is enough to qualify as an uptrend, albeit with only two data points.

S&P 500 Index

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We can see from the chart where those points are and how that trend line moves into the future. We have decided to shift the big purple trend line down to show where the strongest support level lies.

Now, why did we shift it? The prior trend line connecting points just was not relevant to the current price chart, so we shifted it to make it more reasonable. Please note that we are not changing the narrative to fit an opinion, but rather making an observation on the chart and changing the lines so an analysis makes more sense.

While the S&P 500 did not close at an all-time high last week, we still see a strong trend in place and at worst the index might trade in that top range for a while and consolidate. That action surely would frustrate people, which is something the market likes to do.

The candles on the chart are still blue, and according to the GoNoGo indicator, which looks to identify the direction and strength of price movement, that means a strong bullish trend is in place. Moving average convergence divergence (MACD) remains on a buy signal, too, and is rising sharply.

There is nothing wrong here with the S&P 500 chart as it stands, but be aware the rally that has taken place over the past two months has been strong and violent. Expect to see some pullbacks that no doubt will be unannounced.