Thursday, January 19, 2006

Trendline Magic

Just a quick posting today. I've remarked many times about how almost magical trendlines can be. Particularly how, even on a steeply-angled trendline, support can change into resistance. It's as if the price is magnetically drawn to the line, but stays rigidly on one side or another.

Even unusual instruments seem to have this property - check out this mutual fund, symbol USPIX, which is a double-inverse bear fund from ProFunds (in other words, if the S&P 500 goes down 1% on a given day, this fund goes up 2%). Notice how this security's trendline changed from resistance to support.

1 comment:

Anonymous said...

My compliments on excellent analysis, it is appreciated.