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The below chart is what is
called a P&F chart (point and figure chart.)
P&F charts typically
display what is regarded as the most significant price
movements in a recent market move. The charts tend to
accurately identify support levels and market trend lines enabling traders and investors to find out where to buy and
sell securities. If the market breaks a trend line it
might suggest a reversal in market sentiment and could be a
key area to make serious $$$.
In the P&F chart below, an
analysis of the S&P 500, it appears as though the market
will have a difficult time breaking above 960. One key
element of the charts is time. As the weeks pass by the
red lines will continue to slant down and to the right,
reaching lower levels. Eventually the trend line will be
broken but the trends shown below have been occurring since
early 2000. I am guessing that some kind of trend line will be broken when the S&P 500 gets to around 750 - 800
some time in the Fall of 2002.

Source: Stockcharts.com
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