Monday, April 27, 2009

Comparing Linear Regression Channels

Below are chart of Goldman Sachs and the S&P 500 Index. Both charts are 3 day candle stick charts, with standard deviation channels off of long, medium, and short term linear regression lines. The green line is the medium term linear regression line. The blue parallel lines are 2 standard deviations off of this medium term line.

While Goldman Sachs has been able to break through this down trending channel, the S&P 500 has paused at this area. For the over all market to get over this area of resistance, it will take time and consolidation before any strong attempt can be made to exit the channel. As volume has be drying up, the economic numbers this week will play a role in prices moving away from this channel line, one way or another.

GS - Goldman Sachs

S&P 500 Index

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