Monday, September 30, 2013

SPX 60-Minute Chart 200 EMA Cross Falling Wedge Positive Divegence

Equities are set to drop at the opening bell this morning with the S&P's on tap to lose about one-dozen points.  Keystone's SPX 60-minute chart with 200 EA cross is a key market signal and regularly updated on the Short-Term Market Signals page. Bad things will happen to markets if the 200 EMA at 1684.97 fails. The 20-day MA is also at 1685-ish so this identifies 1685 as a key support level. The SPX is above the 200 EMA which signals bullish markets for the hours and days ahead, but, perhaps things will change in favor of bears in the hours ahead? The falling green wedge is a bullish pattern. The indicators are positively diverged as well. This says that a low print today would likely be a great buying opportunity for a quickie recovery bounce move. However, if the political news, or bad Italy news, becomes worse, price may seek the 1671-1674 gap fill. If the 200 EMA fails that will need a back test moving forward.

Thus, one scenario is a bounce from 1685, unlikely since futures are far lower. Thus, a potential bounce from 1680. If the failure at 1685 then leads to a failure through 1680, a target area of 1669-1674 is on tap for a potential bounce. If this occurs watch for a back test of the key 1685 where markets will either recover, or die and collapse. The whole day may need to play out, especially with the Senate not showing up today until 2 PM with only a couple hours of trading remaining in the session, so it would not be surprising to see price close around the 1680-1685 level. If so, treat the falling wedge with respect since a big upward goose move may occur, perhaps as the politicians reach an agreement late at night tonight, then a bit catapult higher move in the morning. Even if a bounce occurs in the near-term, further market weakness is likely moving forward. 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 7:01 AM on 10/1/13:  The SPX dropped to a LOD at 1674.99 and bounced. The day ended at 1682Lots of action around the 20-day and 50-day MA's and 200 EMA so these levels are important moving forward.

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