Thursday, October 16, 2014

SPX Daily Chart

The wild circus continues. Markets collapse yesterday to the low at 1820.66 so pay attention to that number going forward. The brown lines show the strong support and resistance levels at 1897, 1889-1891, 1884, 1878, 1874-1872, 1848 (starting year number), 1841, 1828-1831, 1808, 1803, 1800 and 1796. The only positive divergence is with the stochastics that are also oversold. The ADX line (pink box) moves higher indicating that the downward move in price is developing into a stronger trend. The indicators are weak and bleak (red lines) so lower lows in price are expected after any bounce.

The lower standard deviation band is violated so a move higher to the middle band, at 1954 and falling is on the table (the middle band is falling sharply). Back kisses are needed to the 150-day and 200-day moving averages. The 150-day MA and 200-day MA are flattening and potentially rolling over a very bearish indicator that verifies a cyclical bear market ahead for weeks and months possibly a year or two if they continue rolling over. Watch the 150-day MA each day forward. The last few days print the following 150-day MA's starting with last Tuesday; 1929.88, 1930.50, 1930.83, 1931.02, 1931.07, 1931.13 and 1931.24 yesterday. Since each number increases the 150-day MA slope continues higher. Market bears need the slope to turn negative to prove that extended and sustainable downside is locked in place. Simply write down the 150-day MA at the end of each day forward and see if the slope rolls over to the downside.

The lower support at 1828-1831 did not hold yesterday so price may want to take a look at 1808. A dead-cat bounce is needed and may occur with a wash-out this morning. S&P futures are strongly lower down -30 for a weak start on tap. This would send the SPX down to test the 1808, 1828-1831 and 1841 support levels after the opening bell. A strong relief rally is expected but the indicators show that lower lows in price will likely occur as the future days play out and the rally fizzles. This agrees with the weekly chart that wants to see lower lows after any bounce occurs. Perhaps a move lower to 1808-1831 at the opening bell then a huge recovery today to the 1872-1878 resistance gauntlet. Price should move higher to back kiss the 200-day MA at 1906 at a minimum as time plays out. The SPX is under the 200-day MA for the first time in two years. 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.

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