Sunday, June 16, 2013

SPX Daily Chart Upward-Sloping Channel Sideways Symmetrical Triangle Moving Average Ribbon

The SPX daily chart shows price trying to stay inside the upward-sloping one-half year channel. Price is squeezed sideways by the 20-day MA at 1642.16 moving downwards, and the 50-day MA at 1613.54 moving upwards. This sideways action is further highlighted by the downward-sloping trend line that shows a sideways symmetrical triangle pattern in play. The apex of the triangle has space for two or three more candles which takes the markets to Tuesday and Wednesday--the FOMC meeting with the rate decision, forecasts and Chairman Bernanke press conference on tap. Markets are going to make a commitment on direction this week, likely any day. The ramifications are important since the directional decision will likely result in from 40 to 60 handles further in that preferred direction, thus, up towards 1680, or, down towards 1580.

The moving average ribbon shows price rolling over down through the 10-day MA and 20-day MA. The 10-day is down through the 20-day. The mid-May top was highlighted by price above the 10-day MA, above the 20-day, above the 50, above the 100, above the 150 above the 200. There is no further upside available when the ribbon is in its full glory, hence, the spank down occurs aided by the overbot conditions and negative divergence (red lines). The indicators are weaker (thin red lines and red circles) from mid-April to now but price is far higher. It is surprising that the SPX maintains elevated levels since this behavior with the indicators acts as weights trying to pull price down. This behavior is bear-friendly moving forward.

Volume is dropping off for the whole month of June. Are folks, lucky enough to commit to the long side all year long, taking their chips and going home for the summer? Why wouldn't you if you have 10% or more gains? The April through October period sees the lowest market gains so why not lock in the profits, kick back for summer, and then pick up trading again in the Fall? The volume may be hinting at this behavior.

The 150-day MA has to be watched closely here on out; it is a Keystone market signal. If the 150-day MA flattens and rolls over to the downside, this is firm confirmation of extended and sustainable bear markets. If the 150-day MA continues to slope upwards, the bulls have no worries. Note how the April selling triggered the flattening of the 150-day MA but then the stick-save occurs with more BOJ and Fed money printing rescuing the markets again. It is surprising to not see the 150-day MA flatten considering all the sideways down action for the last month. The projection forward for the SPX is difficult because of the sideways action but the bears appear to have a slight advantage at this juncture. 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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