SPX S/R Week of 1/30/12

Lots of drama in the markets these days and the support, resistance and moving average levels help make sense of it all.  Note how price placed a low on Friday by finding support with the 10-day MA. Any breach of the 10-day MA would signal trouble for the broad indexes.  Thus, the 1316, 1314, 1311, 1307-1308, and 1295 support levels are important as the new week of trading begins. On the top side, 1320, 1326, 1329, 1331 and 1331 resistance are key.

The end-of-month (EOM) prints occur at Tuesday's close as January disappears into a leap-year February. The broad indexes fell into a secular bear market pattern when the August waterfall crash occurred. Markets then languished on the bear side until recently. As seen in the day to day commentary here, Keystone's secular indicators continue to flip back in to the secular bull market pattern as a result of this recent bullish strength.  A key test of this shift to bullishness occurs with the Tuesday print.  Keystone's SPX 12-Month MA Cross Indicator shows the 1283.27 level to be pivotal for the first two days of trading this week.  As of 4 PM EST on Tuesday, the SPX final print will cast the monthly number in concrete. If above 1283, the market bulls have officially wrestled back control of the broad indexes and the pattern shifts into a secular bull market pattern for the weeks and months ahead. If the market bears want to push lower, there is no more time, they must drop the SPX by 36 handles in two days to reestablish bearish authority. So this mini soap opera will come to a conclusion on Tuesday afternoon, be sure and watch.

Focusing on Monday's action, the SPX, starting at 1316, if the bears lose the 1312 handle, the broad index selling will accelerate.  The confluence at 1311-1312 will put up a small fight, but once price ventures under 1312, the bulls will be losing control, and a test of 1307-1308 support should occur in short order.  For the market bulls, all that is needed is a touch of the 1320 handle and that will trigger the large block buyers to enter long accelerating the indexes higher, 1326 will come quickly.  A move thru 1313-1319 is sideways action.

Note how price, at 1316, sits directly in the middle of the bullish and bearish outcomes described.  Perhaps the Sunday overnight futures will provide insight into which side is preferred as the new week of trading begins.  Markets are highly unstable currently.  In addition to the SPX discussion here, watch the SPX:VIX ratio 68 level and UTIL 453 level since these two characters will provide broad market directional insight within the opening minutes of trading.

·        1336

·        1333

·        1332

·        1331

·        1330

·        1329

·        1327

·        1326

·        1323

·        1322

·        1321

·        Friday HOD 1320.06

·        1320

·        1319

·        1318

·        Friday Close 1316.33

·        1316

·        1315

·        1314

·        1312

·        Friday LOD 1311.72

·        10-day MA 1311.22

·        1309

·        1308

·        1307

·        1306

·        1305

·        1300

·        1298

·        1296

·        20-day MA 1295.34

·        1295

·        1293 (10/27/11)

·        1292

·        1289

·        1287

·        1286

·        1285

·        12-month MA 1283.27 (One of Keystone’s Major Secular Signals)

·        1281

·        1278

·        1277

·        1275