Thursday, October 24, 2013

SPX 30-Minute Chart 8/34 MA Cross Channel Failure Potential Bear Flag

The 8 MA finally stabs down through the 34 MA on the 30-minute chart signaling bearish markets for the hours ahead, however, these two critical moving averages are traveling sideways with only a point or so of space between them. The opening bell is very important today. The bulls must create a gap-up open to try and create a positive 8/34 cross and regain market control. Otherwise, the bears will continue taking equities lower. Note the blue channel failure at yesterday's opening bell caused by the negative divergence (red lines). This behavior set up the negative 8/34 cross mid-morning yesterday.

The thin green lines for the indicators are sloping up but this is not positive divergence. Bulls would have been better off to allow price to drop to 1740-ish or lower since the lower low in price, with the positively-sloped indicators would assure a positive divergence bounce, but alas, this is not the current case. The stochastics dropped immediately into oversold territory which created yesterday morning's price bottom. The indicators are not tipping their hand currently, it is a toss-up to begin the day. The blue bear flag is in play with a drop from 1759 to 1740 for the first leg, 19 handles, and then price consolidates with a slight upward bias, textbook action for a bear flag, thus, if a move lower begins from, say 1748, the target is 1729. The 1730 is a support level so this provides street cred for the bear flag projection.

Note the juicy gap at 1733-1737 which will need filled at some point. Key support is 1745, 1737, 1733, 1730, 1726, 1722, 1720, 1710, 1706 and 1697-1698. S&P futures are +6 at this writing about 5 hours before the opening bell which targets 1652 to begin the day. The 8 MA is 1746-ish so any print above will move this important MA higher while price prints under 1746 will move the 8 MA lower and maintain the negative 8/34 cross. SPX is stumbling sideways for now. Watch the 8/34 cross since it tells you who is winning for the road 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.

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