I'm taking you back to the seventies (1974 low) in the first $SPX chart (S&P 500 Index). I drew important trend lines and added the 50 and 200 month moving averages to both charts. The second chart shows the 2000-2010 chop-fest. Writeup pending..
*Writeup 9/14/2010: On the first $SPX log chart, I drew a trend line that hit the 1974 low, 1982 recession low and almost the March 2009 low. The S&P/Trend Line spread widened significantly during the late eighties and early nineties, but tightened when the tech bubble burst. Today, after rallying 80% from the March 2009 low and correcting a bit, market participants have to decide if we're experiencing a 2004 redux (see chart 2) or in a 100 year structural change. If we're in a 2004 redux, the S&P must break above the 50 month moving average. All throughout 2004, $SPX was above and below that level and eventually found support.
As you can see from chart 1, the S&P is trading above the 200 month moving average and below the 50 month moving average. What we don't want to see is the 50 month cross the 200 month to the downside. It would either put overhead pressure on the S&P or aggressively price it in before it occurred (imho). You can't see it, but I bet the 50 month crossed the 200 month to the upside in the early eighties, which sparked the 20-25 year rally. I'm saying this now because the moving averages haven't been this close since that time period.
Now check out the symmetrical triangle continuation formation using the 1974-1982 uptrend and 2007-2010 downtrend lines. $SPX is close to testing downtrend resistance as I type. Eventually I believe the S&P gets squeezed at the apex point and breaks out to the upside, to test 2007 resistance (1,500). After 15-20 years of sideways action, the S&P will break that level and be set free, see the three green arrows. You can also see a long term ascending triangle.
The problem is I can't tell you if that's in 2011, 2014 or 2018. If deflation weighs on the S&P and drags it below the 200 month moving average, the trend line hits 650 in mid-2011 or 800 in 2014. That's why I titled this post "$SPX Trend Line From 1974 Hits 650-800 Up Until 2015". I still haven't changed my near-term views. Read..
Sideways Action Won't Last Forever, Prepare For Catalysts (SPY, VIX) - 9/8/2010
SPY Pierces 50-Day Moving Average, Holds 200-Month But Growth Recession Upon Us - 9/2/2010
S&P 500 ($SPX) Monthly Chart (1974-2018) (FreeStockCharts.com)
S&P 500 ($SPX) Monthly Chart (2000-2012)