Wednesday, October 8, 2014

SPX 30-Minute Chart 8/34 MA Cross Downward-Sloping Channel Positive Divergence

The 8 MA is under the 34 MA signaling bearish markets ahead, however, price is moving above the 8 MA to curl it upwards for a potential positive cross. Key S/R is 1951, 1942, 1936-1937, 1928, 1924, 1920 and 1910. The 100-day MA is 1961.50. The 150-day MA is 1930.29. The green lines show positive divergence in play creating the lift in price. Note the RSI is not especially enthusiastic to continue moving higher so the chart hints at sideways ahead. The FOMC Minutes are out at 2 PM EST only about one hour away. So price may simply travel through the sideways S/R levels. This morning price bounced off the uber strong 1924 support, then has been bumping its head against the 1936-1937 ceiling in front of the minutes. Price is testing this resistance again as this is typed. If price moves up through 1936-1937 resistance, 1942 R is the next target. The steep downward channel matches the previous chart's depiction so you can compare the two.

Keybot the Quant is short as the erratic market circus continues. The algo is tracking RTH 62.13 and XLF 23.08 as the two key parameters affecting market direction. RTH is 62.46 in the bull camp creating market bullishness. XLF is 22.88 in the bear camp creating market bearishness. If the status quo remains, equities stagger sideways like a drunk in Times Square on Satuday night. If XLF moves above 23.08, equities will be running higher in a strong relief rally and Keybot may flip long. If RTH drops under 62.13, equities will crumble and the market carnage will begin again.

Watch the 8/34 cross. The 8 MA is 1935-ish so the bears need to keep price under here to continue the broad market selling. Bulls will be happy by pushing the SPX up through the 1936-1937 R and higherThis 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 6:34 PM: The late day surge was a surprise with equities catapulting higher due to the FOMC Minutes. One day becomes more ridiculous and comical than the next. The rally is due to traders celebrating global and US economic weakness and the prospect that easy money will stay in place for as far as the eye can see. Traders maintain confidence in the Fed since the stock market rallied. One day all will realize that if the Keynesian experiment has not worked in six years it will not work. That reckoning and loss of confidence is the end game and this afternoon would have been a perfect time for that realization and inflection point to occur, however, instead, the Fed wine is flowing like water again. The Fed now reverses its thinking from worrying about inflation and a strengthening economy to worrying about deflation and a weakening economy and long traders comment by saying "give me another drink." It is all shameful but join the bullish party. It's time to rape the upside again. The 8 MA catapults higher towards the 34 MA but it dropped a hair short of creating the positive 8/34 cross but this should occur at the opening bell tomorrow. The bears need to push strongly lower at the opening bell tomorrow if they want to fight back otherwise they will likely roll over. The SPX blew through the strong 1951 resistance, overcame the 100-day MA at 1961.80, overcame the strong 1960-1961 resistance and even overcame the 20-week MA at 1968.47 by a tiny hair. Use this 20-week MA as an important pivot for Thursday. Price should back kiss the 100-day at some point forward. The 1973 is uber strong resistance and the HOD is 1970.36. The 50-day MA is 1973.59 so you can see that 1973-1974 is a big-time line in the sand for bears, a resistance ceiling; the bear's last stand tomorrow. Bears are up all night long fortifying the strong 1973-1974 resistance with all their might. If bulls move up through 1973-1974 price goes to 1985-1986. Keybot the Quant flips back to the long side in an unprecedented triple flip week, long on Monday, short on Tuesday, and long today. Remarkable price action. The bulls push NYA above the important 40-week MA at 10638 which determines if the broad indexes are in a cyclical bull market or cyclical bear. The cyclical bulls are back in charge. Bears need NYA under 10638 pronto; it is uber important. If the NYA stays above 10638 and moves higher, the bulls are going to use the bears as a punching bag going forward.

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