Quick Andrew’s Pitchfork Tool Insight on the SP500

oldfairy

Let’s take a quick look at what the mysterious “Andrew’s Pitchfork” chart tool is telling us currently on the S&P 500.

The Andrew’s Pitchfork is a type of ‘auto-trendline’ tool many analysts use when a market appears to be ‘channeling.’  There’s a lot one can do with the tool which is beyond the scope of this post.
To draw a classic Pitchfork, start with a key high, draw to a key low, and then draw back up to a retracement high (software programs might be a little different in the drawing of the Pitchfork).  I have labeled the steps on the chart and then drew in yellow highlights on where I clicked.  Check the resulting grid that your program draws for accuracy.
In other words, don’t start drawing Pitchforks all over your chart - make sure that the market has ‘respected’ them in the past as key support and resistance.
There are two obvious insights you can glean from the current “Pitchfork” Grid Analysis:

1.  Because the grid has held the market both as support and resistance in the past, it should be expected to continue to do so as long as price stays within the grid.  This means that odds favor a pullback down to a minimum of the mid-line could be expected - that’s currently at 750, but as more time passes, the mid-line will trail lower, perhaps down to the 700 level.
2.  If price breaks upward from here OUT of the confirmed trendline to the upside, we should expect a continuation move to the upside and an invalidation of the grid, which would hint at the end of the Bear Market.
It goes without saying that the market must breakout of the upper pitchfork gridline to expect any continued bullishness.  Failure here would be a massive defeat to the bulls and would pull price back to the midline at best.
Treat the Andrew’s Pitchfork tool similarly to the way you would Bollinger Bands (which are a standard deviation tool).
Watch this level closely to see how the market reacts to this current Pitchfork Grid.
Corey Rosenbloom, CMT

wower

nice!

lwjnbtx

Interesting, thanks.

snowwolf229

lite1067

very good

hfdcai2000

Interesting....    But we will need some confirmations within the next week...  to become a true BEAR, again.....   & make some profit....

Thanks for sharing.     

yshi8141

Seems scottrade doesn't have this tool on its chart.  :(

latitude

thanks

purety

finally somebody's looking at the dailys