Wednesday, June 19, 2013

SPX Daily Chart Fibonacci Retracements

Lots of drama in the markets the last few days. A big feather in the bull's cap is price moving above the 20-day MA at 1640.01. The 20-day MA ceiling and 50-day MA floor was a sturdy bracket keeping price contained until yesterday when the bulls popped above. Today's action is important to see if price stays above the 20-day MA, or not. Price has shown a lot of respect to the Fibonacci retracements and sits at the 62% Fib at 1652-1654. If Chairman Bernanke delivers happy talk today, price should move higher taking out the 62% Fib and following the green wedge to 1669-1673. So the bulls are trying to move above the 62% Fib while the bears are trying to push under the 20-day MA.

The pink circle shows the 5/22/13 inflection point where Bernanke first mentioned tapering QE. This causes the near 90-handle drop from 1687 to 1600. A few days ago price tested the 50-day MA, now at 1617.03, (blue circle) and bounced. Note the cheesy low with the indicators. The MACD was continuing south while the other indicators were positively sloped, but positive divergence did not create the bounce since price did not place a lower low as compared to the first week of June. Price bounced because trader's are giving Bernanke the benefit of the doubt that he will show up firing a money bazooka in all directions throwing money into the crowd of adoring journalists.

In recent days note the dollar drifting lower with the euro moving higher teasing 1.34 showing that traders believe Bernanke can deliver the happy QE talk today. So price used the 50-day MA as a launch point to provide the benefit of the doubt and wait for this afternoon for the decision. Since price bounced off the 1608-1613 area (previous 50 MA), if the Fed does not deliver the goods today, this price should be re-explored in short order. 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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