20 year S&P 500 trendline actually broken months ago

S&P 500 since 1980

I looked at the 20 year S&P 500 monthly chart last week and noted that we’re at an interesting junction in the market. Now that it’s the end of the month, I can say that we have successfully held that level after all. The graph above is from MSN finance. It took me a while to find a legible chart going back before the 87 crash.

Actually, what I have illustrated is technically wrong. I should use a logarithmic scale instead because of the compounding effect of growth in the economy. If we look at the chart on a logarithmic scale, we see that we have just broken it in this year’s market free fall (around June). I guess that’s another reason to the verocity of this move.

20 year S&P 500 chart on log scale

However, it is still interesting to see that we’re bouncing right on the linear scaled chart. Even though it is technically wrong to use it on such long term chart, technical analysis itself isn’t an exact science anyway. So I’m not dogmatic with the proper use of it. As long as it works and within logic, then it’s good!

Update Nov 20: We broke down a major 10-year support yesterday at 820 on S&P. Are we going into the abyss?

Update Aug 6, 09: An even longer term view of the market. A technical analysis of 80 years ofS&P500.

Related posts:

1. Tested the pre-2000 tech bubble, 14 year-old trendline in last 2 weeks
2. Another breakdown of a major multi-year support, are we going down, and I mean REALLY down?
3. Another reason against stocking into a registered trading account this year
4. A whole year, two hundred and six posts later
5. April is Earnings Season One Year After the Bottom