In general, we encourageto take a medium to long-term view of the and not to get involved in “ ” or buying and selling, especially in highly geared .
However, watching the intra-day progress of theand other can be very instructive, especially from a perspective. The S&P is probably the most highly traded and followed of the in the world and therefore the most technically reliable. You can watch it, real-time, from when its opens at 3.30pm South African time (or 4.30pm in our summer) at:
Consider the following example:
This is the intradayfrom last Tuesday, 8th June 2021. As you can see it covers the period from 9.30am when the market opened (4.30pm in South Africa) until about 2pm. You will notice the bold, blue horizontal line which gives the previous day’s at 4226.52. What I want to draw your attention to is how important that previous day’s close was – and usually is.
The market opened up at around 4235, but then quickly fell below the previous day’s close. You should note how the S&P rallied three times to the previous close at 4226.52, each time failing to penetrate that level and falling back. After the third attempt, theclearly lost heart and the index fell heavily down to the day’s of 4210. There it formed a and began to . The rally was strong enough to take it above the previous day’s close – which then became the as the repeatedly tried to drive it down.
This principal ofbecoming once (and vice versa) is common in all types of charts.
The next chart shows thefor Friday 11th June 2021:
The index opened above the previous day’s close (4239.18) but fell quickly. Note that the previous day’s closing level did offer some support but was penetrated. Then it became a resistance level. When the index failed to penetrate the previous day’s close the bulls again lost heart and the index fell to its low for the day of about 4233. From there it began a new rally which took it up through the previous day’s close (after some resistance). That rally was fairly muted and came back down to test the previous day’s closing level (now a support level) several times. When support at 4239.18 held, the S&P moved rapidly higher to close at a new all-timeof 4247.44.
The following is a chart of thefor the past 31 on the S&P:
This shows the context within which the intra-day charts above took place. The candles representing those two days last week are identified by green arrows. They occurred as the chart was testing the previous record high (at 4232.6 on 7th May 2021) from before the 4% mini-. You can see that last week the candles bumped that previous high a number of times before it was finally broken on Friday and reached a new record high. The point is that end-of-day candles are actually a summary of what happened on during the trading day, while the intra-day charts show the detail.
We advise you to watch the S&P500 index real time whenever you can. It is extremely instructive. You will see the importance of the previous period’s closing level and the significance ofsuch as and bottoms. These effects can also be useful in understanding end-of-day charts. After all, an individual candlestick is a summary of the market action of a single day.
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