SPX 30-Minute Chart Real-Time
Note the sideways symmetrical triangle, price now moving down to test the lower rail. The green lines want price to come back up again but it all depends on whether or not price failure occurs at 1378, or a bounce up off the lower rail. The vertical side of the triangle is 22 points. Thus, a breakout above the top rail at 1384, where bulls rejoice, would target 1406. If price fails the lower rail at 1378 then 1356 is targeted. Note the 8 MA and 34 MA cross occurring now that Keystone keeps mentioning. The bears are pushing the 8 MA under the 34 MA which means bearishness ahead. Also remember the 50-day MA is 1379.52 so there is drama at that level as well. The outcome from the triangle may have to wait until Monday since there are only a couple more candles (each candle is 30 minutes in time) that will print to close out the day today so you can study this chart this weekend and of course note the result of the 8 MA versus 34 MA after the close.
Note Added 4/20/12 at 4:05 PM: SPX closed at the bottom rail of the triangle so Monday will show a bounce, or collapse. The indications favor bears but a bounce off the lower rail of the triangle may occur first on Monday morning to satisfy the typical opposite move that occurs from OpEx Friday into Monday.
Break up or down?
ReplyDeleteHello Noob, bulls probably win above 1384, bears win under 1378. Watch the 8 and 34 MA cross. RSI is under 50%, bearish. Watch to see if the stochastics drops under 50% and ROC under zero. For today it is probably a decision of markets moving out sideways to finish the day, or collapse from 1378. Other than that, you may have to wait until the Monday Brdley turn day to know the winner. Bears have a slight advantage. The 8 and 34 MA cross is key.
ReplyDeleteThanks KS. Been following your blog for past couple of months. Quite informative and enjoyable reading your "play-by-play" calls.
ReplyDeleteLMAO, SPX closed 3 penny above it's 50d SMA, now at 1378.50...
ReplyDeleteHello Arnie, SPX 50-day MA is 1379.50, closing print, as it settles out is 1378.53, so a point below. It will be interesting to see how the triangle resolves come Monday. Lots of traders worked up about France. The France-Germany spread requires monitoring here on out.
ReplyDeleteEnjoying your updates and insights into other indicators, such as $SOX and DJU. What do you make of the VIX getting compressed and squeezed between the 50 and 100 day MA? Looking back over the last ten years or so, spending 8-10 trading days over the 50 day MA has usually led to upsides of 25, minimum. I'm thinking a move to $VIX ~25 would be a great buy signal here.
ReplyDeleteHello Anon, yes, VIX will make a decision either above the 100 MA resistance or down below the 50-day MA support. Note that the indicators such as RSI want to see a higher high above 20 and the 20-day MA is coming up to cross up thru the 50 which is bullish for VIX, bearish for markets. That is an interesting stat about the days above the 50-day MA leading higher.
ReplyDeleteVIX 25, however, would likely mean the markets are in the midst of turmoil and probably too early to short (although 25-ish can mark a bottom on a short term basis). As a rule of thumb, traders use the 30, and especially 35 or higher to long the markets. This tends to help from the standpoint that if you enter long and the markets are continuing to collapse, the markets are likely more at the bottom if longs were not placed until 35+. Of course, this is a concept more suited for an intemedidate time frame, weeks and months. The turning point day/s will occur when the VIX is 35-ish and up when there is blood in the streets. Remember we will have many ups and downs on the way there.
A companion to watch is the CPC Put/Call. Keystone posted this chart many times as the low 0.7 prints show the complacency in markets, marking a significant top in the broad indexes. Markets should continue to weaken over the IT until the CPC prints 1.2 or higher. CPC has not printed above 1.10 since mid-December, almost five months ago. Thus, the VIX 35 and higher at the same time CPC 1.2 and higher will verify that a bottom is likely in place for markets and a strong recovery spike should occur. This is the exact time that the baby gets thrown out with the bath water and traders are convinced that the markets are collapsing into oblivion. This is when the markets reverse.
The CPC may be more useful for shorter time frames since it may jump to 1.2 signaling a rally on tap over the shorter term, that rally may occur sending CPC lower again, then the markets may sell off again and CPC will head higher. The CPC 1.4 or 1.5 or higher number may be a better comparison level to reinforce the VIX 35 number and signal a more significant market bottom in place.