Saturday, October 11, 2014

SPX Monthly Chart 10-Month MA Failure First Time in Two Years

The price failure at the 10-month MA at 1909.46 is a big deal and represents serious technical damage to the stock market. The SPX drops to 1906 quickly after the 1910 failure. Algorithms consider this number very important as does the old-timer's in the stock market. Bulls must save the day next week and push price above 1910 pronto or they will fall down the rabbit hole and the market selling will accelerate into ugly carnage. Note that in February, the stock market was about to give up the ghost but price bounced a couple bucks before the 10-month MA; this time it failed.

The 12-month MA at 1896 is a Keystone cyclical market that represents a cliff in the stock market. If 1896 is lost, markets are fully susceptible to a crash scenario and can easily drop into free-fall. This is only ten points away. The e-mini S&P's fell through 1900 to 1893 Friday afternoon. So the bulls and bears must rest up on the weekend and prepare for the epic battle next week.

The 18-year stock cycle is the most reliable cycle. The 1982-2000 secular bull preceded the current 2000-2018 secular bear. It is very common to have dramatic upside cyclical bull rallies such as 2003-2007 and 2009 to present inside a secular bear. The bear may begin growling to finish out the 18-year cycle over the coming 3 or 4 years. It would not be at all surprising for the stock market to print negatively for 2 or 3 of the next 4 years. The Dow turned negative for the year yesterday. The 2018-2036 period is the next secular bull and this will likely occur in concert with rampant inflation and hyperinflation as the Fed's shameful Keynesian programs unravel creating uncontrollable spikes in asset prices. The Dow will likely hit 30K and 40K in the 2020's decade, gold to 5K, the SPX to 3K and 4K, however, a gallon of gasoline will be $10 or more, a loaf of bread will be $5 or $6 and a gallon of milk $10.

Most market participants expect inflation to occur any day and have expected this since late 2009 due to the obscene Fed money printing, however, inflation remains on a milk carton and disinflation and deflation is the order of the day. Inflation cannot exist without wages rising and wages are stagnant globally as economies fall deeper into the deflationary quagmire. The inflation that everyone expects may not show up until the 18-year stock cycle goes from bear to bull in 2018. If the cycle is left-translated a couple years this woud place 2016 as the earliest for the inflation. Thus, those looking for a 10-year Treasury note yield at 3% and 4% and higher in the months ahead may be waiting for Godot; at least for another couple years or more. Watch the 10-month MA at 1909-1910 and 12-month MA at 1895-1896 next week since they hold the future of the stock market in their hands. 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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