Do you think the US indices have formed a higher low after yesterday's price action? I was wondering how one should read the price action and when does one look for a new low. I have attended David's seminar many moons ago (more than twenty five years ago) and am looking for a refresher as I get back to charts. In the interim can you help?

Eoin Treacy's view

Thank you for this question and I look forward to welcoming you to The Chart Seminar in future. I’m sure you’ll remember from The Chart Seminar we always prefer to look at long-term charts first to give us some perspective about where we are in the overall cycle. 

Long-term the S&P 500 broke out to new all-time highs in 2013 and rallied impressively to the recent peak. The range evident since late 2014 has the hallmark of the first big consolidation following a major breakout. 

Medium-term the rally from the low in 2009 has lost consistency. This is particularly important because the trend had become more consistent as it progressed. In fact that is what one expects to happen as more people are converted to the bullish hypothesis. That part of the overall trend has lost consistency which is a cause for concern because it suggests the imbalance between supply and demand that drove the advance is no longer as powerful as it was between 2012 and 2014. The medium-term corrective phase remains in place. 

Short-term a reversionary rally remains underway and the bounce from Wednesday’s intraday low lent the market some additional impetus. However the easiest part of the bounce has already occurred and big questions will be asked of the S&P 500 assuming it gets back to the psychological 2000 level which also represents the region of the 200-day MA.