SPX Daily Chart Tests the Draghi Put from July

SPX daily chart shows that price printed a low at 1343.35 and bounced. Write that number down for future reference.  On 7/26/12, Draghi stepped on top of a soap box and proclaimed that the euro would be supported by all means necessary. These words launched the quantitative easing rally for global equity markets over the last four months.  Note that the levels for the actual announcements, the ECB's plan at 1403, and the Fed's QE3 announcement at 1439, have already failed.  The bounce from 1343 was very important since it prevented a complete collapse of confidence in the quantitative easing schemes. Over the last three days, note the lower lows in price, met with positive divergence across the board (except for the MACD line) which bounced price on Friday.  The futures indicate that further market buoyancy should occur after the opening bell today.  However, the MACD line wants to see a lower low in price which points towards a test of the critical 1340.

The volume strength on a daily basis favors the bears.  Previous charts discussed the importance of the 1366-1369 resistance gauntlet.  If price moves up thru 1370, the 200-day MA at 1382 serves as an upside target, since a back test after the failure six days ago has not occured as yet. Refernce the SPX S/R post from the weekend that highlights a moving average confluence in the middle 1380's which creates strong resistance. The 1375 level is strong multi-year S/R.  Thus, for the upside, watch the 1366-1369 resistance gauntlet, which would lead to 1375, which, if taken out, will lead to the back kiss of the 200-day MA at 1382-ish. The MACD line acts a weight on price and wants to see price come back down again, if not over the next couple days, then at some point forward. 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.