SPX Weekly Chart 20-Week MA Support Test

The SPX is teasing the 20-week MA at 1407.07, a very important moving average. Watch this closely today.  Price came down yesteday to test this support and bounce so the bulls held this line in the sand, for now.  Bad things will happen if the 20-week MA fails. If so, the bulls have a last ditch fortification at the purple trend line. The purple line represents market support from the August waterfall crash bottom thru now, 15 months time. If the purple line at the 1390's gives way, bulls will lose all hope. Further downside targets are the horizontal support at 1360-ish and then down at the starting numbers for 2012 in the 1250-1275 area.

But first thing is first and if the bulls hold the 20-week MA, happier days may be ahead. A bounce off the 20-week MA would place the 1450 green dot in play. Another upside target is a print back inside the rising black wedge which would be a higher high than the intraday high this year of 1476. We have watched the negative divergence (red lines for the indicators) form all these many months. The divergence correctly forecasted the summer 2011 waterfall crash, this year's late April market top, and, more recently, the roll over from the triple top over the last month. The green dots showing the upside targets are not a high percentage bet since the red lines for the indicators are all showing weak and bleak profiles, wanting to see further lower lows in price.

Watch the 20-week MA moving forward, it will tell you a lot about which side is winning. The projection is that the 20-week will fail and price will likely bounce off the purple trend line for a relief rally, perhaps to back kiss the 20-week MA, then lower. Despite all the global stimulus, the weekly chart is strongly favoring the bears moving forward for the weeks and months ahead. Major SPX S/R is 1476, 1472, 1468, 1461, 1460, 1446, 1441, 1433, 1429, 1424, this current 1403-1419 zone, 1394, 1391, 1375 and 1370. 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.