Sunday, January 26, 2014

SPX 60-Minute Chart 200 EMA Cross

The SPX fell through the 200 EMA on the 1-hour chart signaling bearish markets for the hours and days ahead. Note how the bulls held the line mid-January and prevented the failure, but now, the bulls folded like a cheap suit as price fell through the 200 EMA (red circle). The indicators are weak and bleak wanting to see lower lows after any bounce occurs. The stochastics are firmly oversold wanting to see at least a dead cat bounce occur now. Since the indicators are weak and bleak, the assumption is that from one to four candlesticks would be needed to print to properly place a bottom and create positive divergence for a recovery rally. This would be 1 to 4 hours of trading time, so much of the Monday session.

Since the chart wants lower lows after any initial bounce, there are three key support levels in this area; 1788, 1781 and 1772-1775, so one of these three areas is a logical support level where a bounce should set up probably during Monday's session. A back kiss to the 200 EMA will be needed at some point and that is moving flatish across 1824. As long as the SPX stays under the 200 EMA, the bears are in full control of the markets and will maintain selling pressure.

President Obama speaks Tuesday evening and the Fed is on tap for Wednesday so this typically creates market bullishness, so Tuesday and Wednesday may be bull-friendly. The Fed decision is Wednesday afternoon where a market pivot will occur. The new moon peaks about one hour before the closing bell on Thursday and markets are typically bearish moving through the new moon. The month ends on Friday and January tends to finish weak the last couple of days. Thus, taking the seasonality factors in account only, and building a background mosaic for market movement, would be down Monday, up Tuesday and Wednesday, possible move lower at the Wednesday afternoon pivot, or a peak on Thursday morning, then lower into the Thursday close and then lower on Friday. Of course, the multitude of ongoing events will dictate market behavior and CAT earnings in the morning will set the mood to begin the week. The failure of the 200 EMA is a big deal and provides the bears a huge feather for their caps. 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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