Tuesday, June 25, 2013

SPX Daily Chart Downward-Sloping Channel 100-Day MA Support Test H&S Pattern

The red rising wedge, overbot conditions and negative divergence (red lines) created the spank down from the 1687 intraday top. The blue channel is in play now with the blue dots showing lower lows and lower highs, a bearish development, reversing the green dots showing higher highs and higher lows for 2013 into the May top. The 100-day MA was highlighted on the weekend as the battleground since price bounced off the 100-day MA at 1577 on Friday. This moving average creeps higher so the 100-day MA is now at 1578.45; watch this number closely. The SPX closing under the 100 MA yesterday is a bearish development hinting that a further move lower to the 150-day MA is on the table. Today's action will be important to see if the bulls can close back above the 100 MA, or not.

The indicators are weak and bleak except for money flow which wants to create a market bounce and the S&P futures are up +10 at this writing about two hours before the opening bell. The stochastics are oversold so they are agreeable to a bounce as well but overall, the chart remains very negative. The RSI is weak and bleak and did not yet reach oversold territory. The selling in recent days is orderly. The TRIN and VIX have printed elevated numbers but nothing on the order of what would be expected to reflect a wild and robust panicked selling frenzy, at least not yet. Therefore, the chart hints at lower lows for price, be it this week, next week or the week after.

The top rail of the blue channel is 1610-1615 and the 50-day MA, now turning flat, is 1617.91, and price has not yet back kissed the 50. Thus, this 1610-1618 zone is an upside target if a relief bounce occurs. A test of the strong 1593 resistance, and then 1597-1600 resistance, would precede the move to test the upper channel rail and/or the 50-day MA. The two paths in the right margin show potential moves forward; market choppiness may be in store through 1550-1620 for a couple weeks. The thin brown lines show an H&S pattern with head at 1675-ish, neck at 1550-ish so the downside target is 1425-ish if the 1550 area fails.

In the days forward pay attention to Keystone's 150-Day MA Slope Indicator. It is highlighted on the Cyclical Market Signals page. When the 150-day MA flattens and rolls over to the downside, this is a cyclical market signal and says the markets will remain bearish for weeks and months forward. For now, the 150-day MA keeps inching upwards. The last few days for the 150 MA show readings of 1527.95, 1529.38, 1530.96 and yesterday, 1532.42.  Monitor the price differences for the 150 MA to see if the slope is flattening. The differences are 1.43, 1.58, 1.46, so watch to see if today's print tightens this pattern (if the 150-day MA will print below 1533.88 for today (1532.42+1.46)). Overall, the projection for the SPX is for lower lows in price and a test of the 1550-ish area. This area signals major market trouble should it fail, as described in the weekly and monthly multi-year charts posted this morning. 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.

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