Tuesday, December 16, 2014

SPX 2-Hour Chart H&S Lower Band Violation

The SPX may create a sideways vibe into the FOMC meeting tomorrow afternoon. The VIX is at 21 and higher so this creates wilder and wilder intraday and day to day points swings in the indexes. The SPX has a LOD at 1976 and high at 2017 a 41-handle intraday turnaround. Price keeps playing around in this key S/R zone now at 2000 under the critical 50-day MA.

Key support/resistance is 2046, 2040 (very strong overhead resistance), 2033 (a strong S/R level and the 200 EMA on the 60-minute), 2032, 2024, 2018, 2011, 2002-2003, 2002 (50-day MA), 1998, 1994 (20-week MA)
1992 (38% Fib retracement)1988 (100-day MA), 1985-1986, 1978, 1974 (150-day MA), 1973, 1968, 1965 (50% Fib retracement), 1964, 1962 (10-month MA) and then an air pocket to 1951.

Today the low in price clearly popped off the 150-day MA so that moving average now has street cred; watch it closely going forward a key bounce or die market failure level. For now, the bulls run higher through the other moving averages and price bumps its head on the strong 2018 resistance just like yesterday and drops lower again. The red lines show the neggie d spankdown and the green lines show the possie d launch. Price will likely want to print a few candles before negative divergence will appear again which can easily take markets into the Fed drama tomorrow. The RSI did not reach oversold territory so that is a sneaky little 'hanging chad' so-to-speak going forward. Technically, the low price print occurred with all indicators positively diverged hinting that the 1980-ish low should hold.

The brown lines show an H&S pattern with two Quasimodo-style right shoulders. Using a support neck line at 2030-2035 and head at 2080-ish provides easy math to target 1980-1990 which occurred and price bounced satisfying the H&S. The lower standard deviation band is violated so a move back to the middle band at 2022 and falling is needed. The middle band may descend on the strong 2018 resistance and price may head higher to meet at this confluence as well. The days before a Fed meeting tend to be bullish and during OpEx week a Tuesday low typically leads to a Wednesday high.

Keybot the Quant remains short and the algo is tracking financials; XLF 23.95 as a bull-bear line in the sand. The bulls push up through XLF 23.95 which provides the upside lift to the broad marketThe SPX may continue sputtering sideways through 1998-2018 into Wednesday. 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 1:28 PM: The bulls slip on a banana peel with the SPX tumbling to 1989. The market action is insane. What monsters have the Fed's Keynesian experiment created? VIX is up to 21.90. The XLF drops under the critical 23.95 identified by the Keybot the Quant algorithm ushering in the stock market weakness. Market bulls need XLF above 23.95 otherwise they got nothing and will receive further pain.

Note Added 1:32 PM: Okay, baby, the SPX is at 1988.32. The 100-day MA is 1988.07. The challenge is on for a major bounce or die decision. The bull and bear have entered into a cage match; two have entered but only one will exit in the following minutes. What say you price? Bounce or die from 1988?......

Note Added 1:37 PM: Bounce. SPX up to 1992 moving higher. The 100-day MA support holds.

Note Added 1:47 PM: Price cannot move up through the 20-week MA at 1994 so those are your two boundaries. The 1994 above and the 100-day MA at 1988 below. Price will exit one side or the other telling you the winner moving forward. The SPX is at 1992 deciding on which way to break and as the chart above hints, the bulls have the advantage for the hours ahead. XLF 23.95 provides the market answer and price keeps bouncing above and below.

Note Added 2:10 PM: SPX moves higher to test 1998 R. The XLF is at 23.99 above the important 23.95 level moving higher sending stocks higher.

Note Added 5:26 PM: The XLF loses 23.95 in the afternoon tumbling to 23.69 sending stocks lower. It is surprising to see the SPX come down to 1973 at the closing bell due ot the chart above although in fairness the positive divergence was a tiny sliver for the MACD line and as mentioned the RSI has yet to become oversold. With the beating into the closing bell, the money flow on the 2-hour chart drops and wants to create a lower low which will delay a bottom for price for one to three candlesticks (all other indicators remains positively diverged wanting a bounce) which is 2 to 6 hours and bingo, yes, that would put the SPX at the FOMC meeting announcement at 2 PM tomorrow. The expectation would be that the 2-hour chart would be set up to begin a bounce tomorrow but in these markets and with the oil and Russian ruble collapse, anything can happen. The Keybot the Quant algorithm remains short and is tracking XLF 23.95 and SOX 657 as the two key parameters impacting market direction currently. Watch these closely on Wednesday. Bulls win with XLF 23.95. Bears win with SOX 657. Status quo and stocks will move sideways. The SPX is at 1972.74. The 150-day MA is 1973.95. The pivot from here is key tomorrow morning. Bounce or die. You knew the 150-day MA had street cred after the test earlier in the day. All eyes now focus on Russia. The janitor is emptying an increasing number of vodka bottles into the dumpster behind the Russian central bank building this evening. The pizza delivery boy is at the front entrance. It's going to be a long night.

Note Added 5:11 PM on Wednesday, 12/17/14: Fed Chair Yellen delivers the dovish goods and creates a huge stock market rally. The central bankers are the market. You knew the rally was imminent since XLF moved above 23.95 at 1 PM.

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