Friday, June 28, 2013

SPX Daily Chart Channels Showdown at the 20 and 50 MA's

Major market drama plays out today and early next week. The pink circle shows the confluence of the 20-day MA at 1620.00, 50-day MA at 1620.42, lower rail of the blue channel and strong resistance levels at 1614, 1618, 1623 and 1626-1627. In addition, Keystone's SPX 60-Minute Chart market turn signal that uses the SPX cross with the 200 EMA shows this critical moving average at the 1619-1620 level as well. The stakes cannot be higher. The markets have to make a decision at 1619-1620 either today or early next week and the move above or below will likely send the SPX from 20 to 30 handles in that preferred direction.

The blue channel shows the recovery rally as a simple back kiss of the lower rail where a bounce or die decision is required. A successful back test will result in a price collapse from here and the bears singing a happy tune as the market downside returns in force. The bulls are trying to pump price higher to return the SPX back up into the safety of the upward-sloping channel so the upside party can continue to 1636 R, 1649-1650 R and perhaps new all-time highs again.

The 20 MA fell through the 50 MA which is a bearish signal moving forward. The slope of the 50 MA is flattening another bearish signal. The red dots show lower lows and lower highs consistent with a bear move while the green dots show higher lows and higher highs consistent with a bull move. The central bankers saved the markets this week with China's pumping, followed by the ECB, then the Fed heads pumping QE talk all week long, and now the BOJ sending the dollar/yen above 99 overnight to pump the Nikkei and U.S. futures. The money flow indicator was positively diverged creating the SPX bounce, along with oversold stochastics, but the bounce is mainly due to central bankers and not the technicals. Watch the 50% bull-bear levels for RSI, stochastics and money flow, as well as the zero line for the MACD, since this will provide hints on direction.

Markets are at a watershed decision. Volume may be on the light side today so some wild and erratic action may be on tap and the first couple days of next week will likely need to play out as well to firmly determine the SPX decision at this critical 1619-1620. If price punches up through 1620 to create happy bulls watch the strong 1626-1627 level since the move may be a one or two day upside fake-out, however, if the 1626-1627 resistance gives way to the upside, the bulls are in firm control of markets moving forward. For now, the edge is given to the bears. Watch the showdown today at 1619-1620. 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.


  1. KS, thanks for guiding us over the past week. The 1623-24 area is also the 50-percent retracement of the correction from 1687 to 1560. That's a lot of resistance to cut through. But if anyone can do it, it's the three (more) Fed speakers scheduled for today. It was embarrassing to listen to their explanations yesterday. We're being treated as idiots.

    1. Good point. It is difficult to keep up with all the ongoing drama. That 50% Fib as you describe is 1623.28 and 1623 is key S/R based on price action. This entire 1618-1627 zone is immensely important. Looks like futures are starting to slip.


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