Thursday, February 6, 2014

SPX Weekly Chart Fight for 20-Week MA

The SPX weekly chart has been a fave to watch over the last three months or so. We watched the top form with the rising red wedge, negative divergence and overbot conditions creating the smack down. Price violated the upper standard deviation band so a move back to the middle band was in order, and occurred. This is also the 20-week MA at 1781.48. As highlighted in the previous chart, 1781 is strong S/R so it is given street cred since the 20-week MA is here as well.

This chart is sick, very, very ill. The indicators are all weak and bleak wanting to see lower lows in price after any bounce would occur. The stochastics drop under 50% entering bear territory. Watch the RS 50% level; see how it hesitates at 53.80 since it knows the negative consequences once it loses 50%. The MACD line crosses (tiny red circles) show the sell signals. As a safe way to trade, follow the MACD crosses for signals for any stock or index since they will help keep you out of trouble. The PPO indicator crosses are a good indicator as well which you can explore for your charts.

The selling volume is robust in January. That is a lot of traders that may not be in a hurry to rush back into the long side. The chart is weak and shows no positive divergence to even create an initial bounce. Use the 1781 as a key bull-bear level. Bulls will likely run 10 or 20 handles higher if they break up through 1781. If the bears can hold the line at 1781, the lower band is likely on tap at 1680-1700. Projection is for lower prices moving forward for the weeks ahead. This information is or 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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