But simply projecting QE3 by curve fitting the upward trend and the diminishing returns yields an interesting result. The pumps occur one after another with a 670 point increase for QE1, then about 330 points for QE2, then about 270 points for Operation Twist with LTRO 1 and 2, which then projects about 255 points for QE3. Interestingly, the 1270 bottom plus 255 yields 1525 as a target for QE3. Keystone's 80/20 rule says if a close above 1480 occurs, a move to the 1520's is likely. The red lines show negative divergence in place but the shorter term lines, due to all the recent money pumping talk, will want to see a stutter step move or moves occur as the SPX tops and rolls over. So perhaps a path of selling will now occur down to the mid to high 1300's, or low 1400's, then back up to tag the 1525, then roll over. These markets can only be taken one day at a time and the above projection is simply based on fitting the upward curve. 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.
It's been almost a year since the $SPX touched its 200-week MA (now 1156 and slowly rising). Will it ever happen again? (How about sometime after the Fiscal Cliff remains unresolved in the New Year? There may not be much of a Santa Claus Rally this year - or perhaps it comes early.)
ReplyDeleteHello Weaver, yes, all moving averages are always touched at some point in time since they are calculated from price so they can never completely deviate away from price. The 200 MA leveling off and now starting to slope up is a bull friendly signal but it could easily roll over again.
ReplyDeleteWatch the 150-day MA slope on the daily chart. When that moving average changes its slope to negative that will tell you the bears are growling, it is still inching higher each day.