Wednesday, June 11, 2014

SPX 30-Minute Chart 8/34 MA Cross H&S Potential Island Reversal Pattern Developing

The 8 MA remains above the 34 MA signaling bullish markets for the hours ahead and leading the way for this 3-week rally. Bears got nothing unless they create a negative 8/34 cross. The 8 MA is moving down, and 34 MA is moving up, and with weak S&P futures, a negative cross may occur today. The 8 MA is 1951 so as long as price stays under the 8 MA will keep moving lower.

The blue lines show an H&S in play with neckline at 1947 and head at 1955-1956 targeting 1937-1938 if the 1947 fails. Note the juicy gap fill needed at 1941-1942 which should act as a magnet as time moves along. The gap up at this level creates the island that price now sits upon. An island reversal pattern is in play where price may come down to 1943-1944 and then immediately plunge through a trap-door to sub 1940 creating the island reversal. The positive divergence on the RSI (that avoids the sub 50% bear territory) and histogram create the recovery yesterday but the MACD line, stochastics and money flow all want to see lower lows in price and the futures are obliging.

Bulls are fine unless a negative 8/34 cross occurs. 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 11:18 AM:  Wonders never cease; the bears finally create a negative 8/34 cross on the 30-minute signaling bearish markets for the hours ahead. If the bulls are going to reverse the cross they must push SPX price immediately higher over the next hour or two. The 8 MA is at 1946.72 and dropping so as long as price remains under 1946 and lower bears are fine; above 1946 and bears will fold like a cheap suit. The TRIN is 0.79 today strongly favoring bulls. The GTX remains well elevated above the 4990 bull-bear line helping bulls. Markets are sideways choppy. Price keeps testing the 1942.50-1943.00 support level which is just above the gap fill. Thus, price has three choices either drop to fill the gap at 1941-1943, collapse straight down in a heartbeat to 1940 and lower to create an island reversal, or, bounce. So far the bulls have been bouncing off this 1942.50-1943.00 support.

Note Added 11:27 AM: Copper now recovers back to the flat line which helps the bulls. Bulls will end up okay today if the TRIN stays at 0.77 well under the 1.00 level.

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