Wednesday, July 9, 2014

SX 30-Minute Chart 8/34 MA Cross

The 8 MA remains under the 34 MA on the 30-minute signaling bearish markets for the hours ahead, however, the 8 MA is curling higher (blue line) and 34 MA rolling over downwards which sets up a potential positive cross as the FOMC Minutes are released at 2 PM. The 8 MA is 1968 so as long as the bears can keep the SPX under 1968 they can curl the 8 MA downwards. Price is now at 1969, however, helping the bulls by sending the 8 MA ever higher.

The bulls got nothing unless they create a positive 8/34 cross. Bears need to push the SPX under 1968 and lower to signal that more downside is ahead. The negative divergence (red lines) create the spank down this week but note that the RSI is long and strong wanting another high print in price at 1985-ish. The indicators are creating VST long and strong behavior (green lines) so higher priced candlesticks are anticipated, at least into the FOMC Minutes. Perhaps that will be the pivot point at 2 PM. Market bears need to push lower right away today without hesitation or they will lose their grasp.

Tomorrow the stock market is typically down 70% of the time so the action this afternoon will be interesting since the professionals may increase shorts to play the seasonality expectation (short-the-rally). Watch the 8/34 cross to determine who is winning. The sideways channel at 1960-1978 is in play with price and the moving averages exactly in the middle building to a crescendo when the FOMC Minutes are released in about one hour's time (two more candlesticks). 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 1:14 PM: The 34 MA is 1970.28. SPX is 1969.13. The 8 MA is 1968.38. Squeezing in tight for the FOMC Minutes that decides who is the winner in 45 minutes. Bulls win above 1970. Bears win under 1968.

Note Added 8:39 AM on 7/10/14: The bulls won the day yesterday and this was projected to happen due to the low TRIN in place (0.7's). The 8 MA crosses above the 34 MA yesterday afternoon signaling bullish markets for the hours ahead but those hours may only be the hours that ended yesterday's session. A negative 8/34 cross may occur after the opening bell to place the bears back in the driver's seat for the  hours ahead. Seasonality-wise, as mentioned this week, today the stock market is down 70% of the time and this is playing out again this year, so far. S&P futures are -17 moving towards the opening bell. Read the Keystone the Scribe blog to come up to speed with the world's problems creating the angst, especially weak Japan machinery orders and the Portugal bank contagion that is potentially starting to spin out of control. Note that the SPX is poised to test the critical 1960 support level, the lower rail of the sideways channel, as shown in the chart above, for a bounce or die decision going forward. Keybot the Quant remains long but is on alert for a potential move to the short side. The algorithm likely needs to see either RTH 59.34, VIX 13.15 and/or XLF 22.46 to flip to the short side. Reference Keybot's site for further information. Any one of the three would do. As markets sell off, if none of these three parameters flip into the bear camp, the bears got nothing, and the stock market will recover.

Note Added 11:10 AM on 7/10/14: The bears could not pull RTH, VIX or XLF into their camp, yet, even though the VIX did spike above 13.15 initially, so the bears got nothing, and stocks are recovering from the gap down opening. The 8 MA is under the 34 MA signaling bearish markets for the hours ahead. Watch the 8/34 MA cross on the SPX 30-minute closely today to gauge who is winning.

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