Wednesday, July 17, 2013

SPX 30-Minute Chart 8 and 34 MA Cross

The negative divergence spank down surfaced late Monday with a doji candlestick signaling the top.  Yesterday the 8 MA stabs down through the 34 MA signaling bearish markets for the hours and days ahead. Price is at 1676 one point above the 8 MA at 1675 so this causes the 8 MA to curl upwards and allow the bulls to fight back to try and reverse the negative 8/34 cross. If the SPX begins the day at 1675 and heads lower the bears will be cruising. If the 8 moves back above the 34, the bears will fold like a cheap suit and markets will move higher with the SPX testing the all-time high at 1687. A higher thrust for equities at the opening bell will encourage the bulls. A flat to weak opening today will maintain the bear path. Chairman Bernanke's words are released in 45 minutes, as well as Housing Starts, which will dictate the futures and the opening market direction.

The blue lines show a potential bull flag. First leg is 12 points, from 1684 to 1672, now a sideways consolidation. If price drops from this 1676-1678 area, the strong 1666 support would be tested. For today, the bears win if the 8/34 cross remains negative and the VIX stays above 14.20. If the 8/34 cross reverses to the upside to favor bulls again, and the VIX drops under 14.20, the SPX will be headed towards 1700. 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.

Note Added 10:33 AM:  Bull flag pattern is negated as the SPX prints at 1683 matching the prior highs and continuing to show negative divergence. The 8 MA is heading upwards to create a positive bullish cross of the 34 MA.

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