I find the comments in the financial media about chart support and the June low in the S&P 500 a bit amusing Thursday morning.
In this six-month daily bar chart of the S&P 500, below, we can see that the key index traded below 3800 for just 13 days. How much buying can happen in less than two weeks?
Think of it this way: Could the traders who work for Warren Buffett amass their position in Occidental Petroleum ( OXY) in 13 days? I will pause for a few seconds to let that sink in.
Yes, the S&P 500 made a low in June. We can all see it on the charts, but the question to really ask yourself is whether this is an important zone that traders will defend.
Talk amongst yourselves.
Bottom-line strategy: The longer or bigger a support zone, the closer in time when it occurred and the more volume transacted are the real measures of important support zones.
