Friday, August 8, 2014

SPX 30-Minute Chart 8/34 MA Cross Descending Triangle Pattern

Here is an update on the 30-minute. The band squeeze (green arrows) results in a move lower. The SPX lost the 1915-1917 zone yesterday, the base of the descending triangle, so the 1880's are in play. Price comes up for a back kiss of 1915-1917 where it is bounce or die time again. If the bulls plan on creating a relief rally, a move above 1917 will send them in that direction. Note that the upper red trend line for the triangle pattern is at 1921, therefore, even if price overtakes the 1915-1917 zone to the upside, the 1921 would have to be taken out, and higher, to prove the bulls mean business. As this is typed, the SPX runs higher up over 9 points to 1919 so the 1921 description is in play. Price has now returned inside the safety of the descending triangle between 1917-1921 taking time to make a decision on which side should be favored going forward. Bulls win above 1921. Bears win under 1917.

To fine tune the descending triangle target, the base line is 1917 with vertical side at 1947, so 30 points, thus, 1917-30 = 1887 as the downside target, but bears need to move price back under 1917 pronto. Note that the triangle is squeezing in to an apex so a decision has to be made to exit the triangle, one way or the other, within about three to six candlesticks, about one to 3 hours, so today should tell the tale.

The bulls are working on the green inveted H&S pattern with head at 1906 and neck line at 1917 which would target 1928 (1917+11), the horizontal resistance from early yesterday. The 8 MA is under the 34 MA on the 30-mintue chart signaling bearish markets for the hours ahead, however, the SPX is above the 8 MA sending it higher for a potential positive 8/34 cross today. The indicators are leaning bullish in this near term price action and the MACD positive cross occurs favoring bulls. Watch the 8/34 MA cross and 1921 and 1917 price levels as described to find out who wins. 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 11:59 AM: SPX is 1919 exactly in the middle of the 1921 and 1917 levels. Dollar/yen remains elevated at 101.91. VIX is down (which helps bulls today) to 16.39 but this elevated VIX 16-17 area and higher is very bear friendly going forward. A VIX above 17.74 (200-week MA), should it occur, will send the stock market into free fall. TRIN is 1.16 today favoring bears above one. There is something for everyone today. Price only has liited space available in the triangle pattern above so a winner must be selected at any time today. Who will win? 1919.03 .... 1918.77..... 1918.84 ... the tension mounts..... 1918.36 ...

Note Added 2:37 PM:  The bears are slapped in the face. The descending triangle pattern is negated. SPX moves above 1921 and rocket launches to the 1928-1929 resistance targeted by the inverted H&S above (green bars). The bulls did it with retail stocks. RTH moves above 59.51, identified by the Keybot the Quant algorithm as a bull-bear line in the sand, which creates upside market juice. The bears need RTH below 59.51 to renew the selling. Bulls will receive additional upside fuel with JJC 38.92 or UTIL 543.81. So bears need weaker retail stocks and bulls need higher copper and/or higher utilities, respectively.

Note Added 2:41 PM: Gauging the market metrics, at 1:30 PM the 8 MA crosses above the 34 MA on the SPX 30-minute signaling bullish markets for the hours ahead. The SPX 30-minute chart is also displaying long and strong indicators so it will likely enable the highs to remain through the close. The SPX 1-hour and 2-hour charts are showing long and strong indicators as well so it looks like the bulls may have staying power for a relief rally. Of course, a tape bomb can occur at any time roiling the markets. The dollar/yen is 102.02 so a weaker yen provides stock market juice, however, as this morning's chart shows, the bulls really need to run up through dollar/yen 102.10 to prove they have the bones for a substantive recovery rally. Since the 30-minute, 1-hour and 2-hour charts show indicators that are long and strong, the SPX may need to print 3 or 4 of the 2-hour candles to develop negative divergence, which is at least 6 to 8 hours which takes the stock market into and through Monday. So it is looking good for bulls in the VST. The gap at 1936-1939 is in play. If the bulls break up through 1928-1929 resistance, the gap at 1936-1939 will be targeted next. From the last SPX S/R missive that was posted, the 1924 level is very strong support and 1949-1951 very strong resistance. Key S/R is 1924, 1925, 1930.67 (August begins here), 1931, 1937, 1940, 1942 and 1949-1951. So this entire zone serves as a bracket. Overall, bulls need 1949-1951 and higher and bears need 1924 and lower which will identify the next strong trend. Until then a fight continues. The 1931 is a key resistance level and will act as a pivot. If 1931 R gives way, the 1937 R should come quickly.

Note Added 2:59 PM:  RTH 59.60. UTIL 539.71. JJC 38.81. Status quo. VIX 15.92. Volatility is dropping today which helps bulls but overall on a daily and weekly basis elevated volatility is causing a pall on markets. TRIN 0.88. Say no more. The TRIN under one will keep the stock market elevated into the closing bell.

Note Added 3:56 PM:  The bulls are punching higher, through 1928-1929 which sent price to the 1931 R immediately, HOD 1931.91 so bulls are trying to break up through 1931 since that will set the course to 1937. UTIL is at 542.88 moving closer to the important 543.81 that will be key all of next week.

Note Added 4:02 PM: The bulls stage a recovery orgy today. Dollar/yen 102.07. Banzai!! However, note that the dollar/yen is not yet above the 102.10 highlighted this morning. Also UTIL and JJC did not confirm the late day happy move. RTH stays bullish. TRIN 0.66 that creates the late-day thrust higher. The 10-year yield is 2.42%. The yield should have moved much higher considering the stock rally. Today's equity move has a lot to do with short-covering. Volume is below average only at about 85% of the average expected volume today. SPX closes on the 1931 handle. Retail, utilities and copper are key for next week.

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