Tuesday, December 2, 2014

SPX 30-Minute Chart 8/34 MA Cross

The 8 MA drops under the 34 MA on the 30-minute signaling bearish markets for the hours ahead. The 8 MA is at 2055 so if price stays below the bears are in business and will create weakness moving forward. If price moves above 2055, the 8 MA is going to move higher for a potential positive 8/34 cross that would once again slap the bears in the face. Bulls got nothing without the positive 8/34 cross.

The spank down from the rising wedge, negative divergence and overbot stochastics occurs with the top on Friday. The stochastics and RSI remain in bear territory (under 50%). The indicators are mixed indicating sideways action. Note how price came down and filled the gap at 2052-2057 rather than creating the island reversal pattern. The sideways brown channel provides the answer to the path ahead. Bulls win above 2057-2058. Bears win below 2052. Key resistance above is 2057, 2065, 2067, 2070-2071, the all-time closing high at 2073 and all-time high at 2076. Key support is 2052, 2046, 2038-2040, 2030-2032 and 2024. Price is now moving sideways through the 2052-2057 range making a decision. 

Overnight the PBOC rides to the rescue for global markets. The reserve requirement ratios may be lowered for the Chinese banks (allowing more money to lend) providing stimulus so the Asian markets, Europe and US futures all bounce higher. All Hail the central bankers! The central bankers are the market. Watch the channel boundaries at 2057 and 2052 as mentioned and the 8/34 cross since that tells you who is winning going forward. 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 6:43 AM: Keybot the Quant algorithm remains long through the roller coaster ride yesterday. Watch VIX 14.48 since the algorithm considers it the most important market parameter impacting market direction currently. The bears have a feather in their caps since VIX is at 14.29 above the 200-day MA at 13.82 a market bearish signal so pay attention to 13.82 today. If markets move higher but the VIX stays above 13.82, the bulls got nothing and stocks will reverse and weaken. Bulls got legs if VIX drops under 13.82. In general, as per Keybot, bulls win going forward if the VIX remains under 14.48. Bears win big by stopping the stock market rally if the VIX is above 14.48. Keybot will likely flip short if the VIX moves above 14.48 and the SPX drops under 2050. S&P futures are +3.

Note Added 3:07 PM: The VIX is 12.94 dropping under the 200-day MA at 13.82 this morning so the fix was in and the bulls punch the bears in the face. At 1 PM, the 8 MA punches up through the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead so the bulls also took the bear's lunch money after the punch to the face. The SPX recovers all of yesterday's loss then some. The dip-buyers are encouraged by the never-ending central banker easy money. All Hail the PBOC! China created a cascading global rally simply with lip service promising lower triple R's for the banks. The SPX moved up out of the channel above at 2057-2058, then through 2065 R, then 2067 R, and prints a HOD near 2069. So the 2070-2071 resistance is in play into the closing bell along with the 2067 support. Price is at 2068.

Note Added 3:17 PM: The bears should be glad that equities recovered since the SPX buttoned up the gap left behind yesterday at 2066-2068 on the daily. Now price has no further reason to move higher at least in respect to filling any overhead gaps (the minute charts show a gap at 2072 so price may want to top out there tomorrow). The tight bands on the SPX 2-hour chart squeezed the move lower yesterday which violated the lower band and price has already returned to the center band at 2065. The upper band on that chart at 2078-2079 would be in play especially with at least about 2 or 3 candlesticks needed for price to roll over (about 4 to 6 hours which would be through tomorrow's trading). The big event this week is the ECB rate decision and press conference on Thursday morning. There is only one session remaining until President Draghi visits the mountain and brings down the tablets from On High telling traders how to trade the markets. Draghi promised a sovereign bond-buying pony so he better deliver the pony or at least announce that he has made a down payment on the pony. The central bankers are the market. So equities may stumble sideways into the ECB decision. Oddly the TRIN is elevated at 1.69 which favors sellers not buyers today. VIX is catching a bid now at 13.04 trying to climb. Bears need VIX above 13.82 just to attain a sliver of hope that they could turn the tables on the bulls and not have to give up their lunch for a change.

Note Added 3:36 PM: In the excitement today the Dow Industrials sneak out a new all-time record high with $INDU at 17897.05 beating out the prior high at 17894.83 six days ago. The Dow appears set to print a new closing high as well as long as it ends the day above the 17828.24 all-time closing high from two days ago. Price is at 17869.

Note Added 3:42 PM: The VIX is 12.97 well under the 200-day MA at 13.82 so the bears got nothing.

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