Sunday, December 14, 2014

SPX Daily Chart Lower Band Violation Expansion Pattern

The bears finally extract revenge against the historic seven-week central banker-induced stock market rally. The negative divergence was highlighted a week ago and the spank down occurs (red lines and arrow). The indicators remain weak and bleak. Stochastics are oversold. After any bounce lower lows in price would be expected. Price begins the week exactly at strong support at 2002-2003 and must make a bounce or die decision immediately when the bell rings. Bulls win above 2003. Bears win below 2002.

The lower standard deviation band is violated so a move back to the middle band at 2055 and dropping is on the table. The middle band may drop to 2040 which would create a confluence where price may seek for a recovery move. The neon blue expansion pattern, or megaphone pattern, remains in play ultimately projecting the low 1800's. Note the selling volume remains robust continuing to outpace the buying volume. Friday was a distribution day with the larger volume as compared to Thursday showing the smart money handing off shares to the bag holders. The expectation is for lower prices going forward after any bounces due to the weak and bleak indicators.

Key support/resistance is 2046, 2040, 2038.00-2038.15 (strong support and the 200 EMA on the 60-minute), 2032, 2024, 2018, 2011, 2002-2003, 2000.75 (50-day MA), 1998, 1992 (38% Fib retracement), 1990.75 (20-week MA), 1987.96 (100-day MA), 1985-1986 and 1978. 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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