Friday, May 16, 2014

SPX Daily Chart Tight Standard Deviation Bands

The pink standard deviation bands are squeezing in tight squeezing price out to the downside. Sometimes these moves are fake-outs, however, so trading will need to play out into Monday and Tuesday to confirm that price wants to move sharply lower now. Yesterday's low print did not touch the lower pink band so a move to 1860 would be a reasonable expectation. The 20-day MA at 1878.42 is the ceiling and the 50-day MA at 1867.86 is the floor; whichever way price exits identifies the winner going forward. Price begins at 1871.

The red lines show the three recent negative divergence smack downs the last one starting two days ago. The RSI slips under 50% into bear territory. The volume was stronger than recent days but a hair short of the upside volume over one week ago when the bulls bot the market bottom. This indicates that the bears may not have much juice in the near-term unless today is a high-volume down day. Projection is continued sideways to sideways lower going forward. The tight bands should squeeze a continuing move lower perhaps to 1848 if the downside squeeze continues. If price drops under and remains under the 50-day MA, another ten or 20 handles of downside should be on the table. Bulls may create a reversal move and acceleration higher to all-time highs again if price overtakes the 20-day MA at 1878 and higher. S&P futures are -3 about 1-1/2 hour before the opening bell which would set the stage for a fight at the 50-day MA today. 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 2:13 PM: The SPX fell through the 50-day MA at 1867.70 but recovered back above today. The current print is 1868.63 so price is coming down for another look. Price will bounce, or die. Watch semi's. SOX is printing 572.62 remaining above the critical bull-bear line in the sand at SOX 569.90 identified by Keybot the Quant. This keeps the broad indexes buoyant today. If SOX remains above 569.90, markets will float out sideways into the weekend. If SOX fails 569.90, the SPX will slice down through the 50-day like it is not even there and markets will end the week very ugly. What say you semiconductors? VIX is under 13 providing bull juice. TRIN 1.17.

Note Added 2:58 PM:  Bounce. The SOX runs towards 375 so the SPX catapults higher running towards 1874 printing the highs of the day. VIX is at the low of the day crumbling to 12.56. TRIN drops to 0.99 now on the bull side today albeit by one single penny. The bulls are flexing their muscles into the closing bell. XLF is at 21.70, however, and bulls will need to push up through XLF 21.85 to develop any sustainable upside.

Note Added 4:18 PM: The bulls run markets higher into the closing bell and the SPX stalls at the strong 1878 resistance. Price could not close above the 20-day MA at 1879.07 so the 20-day ceiling and 50-day floor battle continues on Monday morning. Bulls will need XLF 21.85 to prove they will send equities higher and financials took the pipe this week. Bears need SOX 569.90 to prove they will send equities lower. These are key parameters for Monday's trade.

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