SPX Daily Chart Tight Bollinger Bands to Squeeze a Large Market Move

The tight inward squeeze by the Bollinger Bands (BB) is remarkable. Going back three years a tighter band cannot be found. The Draghi decision is about four hours from now, and the Jobs Report tomorrow morning will determine the direction that price will explode towards.  When the BB's come in tight (green lines) a large price move is about to occur one way or the other. From a 1403-1406 pivot, a move upwards to 1427, or downwards to 1380-1385, is at the doorstep, and it will happen very quickly, perhaps by tomorrow's close.

The middle BB is always the 20-day MA, a critical moving average to follow for all tickers and indexes. Note how once price touches the outer BB it must work back to the inside to at a minimum touch the middle BB, and sometimes keep moving to touch the opposite BB (black dots). The last outer touch was in early August. Price has moved back to the middle BB and an intraday touch of the lower BB two days ago would satisfy the move to the opposite BB, but, considering we are exactly on the edge of the huge move, all bets are off. Simply ride out the decision coming.

Watch to see if the RSI drops under 50% which would be a bearish indication; bulls are happy if the RSI stays above 50%.  Likewise the money flow. Stochastics want to see a lower low in price. The SPX continues moving thru a developing descending triangle and the base line of the triangle is the lower BB at 1397.  The upper BB is at important overhead resistance at 1419. The tight BB's are like a tube of toothpaste that has the lid barely attached. The tube is pressed harder and harder, squeezing ever tighter, until, whoosh, the cap flies off and the toothpaste flies out in a huge stream. The same thing is about to happen with the SPX. The bulls want to see the move hit 1419 then 1427. The bears want to see the 1397 failure which leads to 1391, then 1385, then the all-important test of the 50-day MA at 1380. High drama is on tap to finish out the week. Hang on to your hat. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.