Monday, January 19, 2015

SPX Daily Chart

Price is respecting the various moving average levels. The 20-week MA is at 2015. The 200 EMA on the 60-minute chart is 2037 and price is under this level siganling bearish markets for the hours and days ahead unless the bulls push above 2037. On the daily chart above, the 150-day MA supported price during the December selloff and last week. Price bounces from the 150-day at 1992.36 so this level carries serious street cred. If 1992 fails, equities will be in serious trouble.

Price ran higher and pierced up through the 100-day MA at 2007.45 then up through the 20-week MA at 2015 to rest at 2019. The indicators are very favorable to a sideways move ahead which makes sense considering that ECB President Draghi is planning to announce QE on Thursday morning and orchestrate a move in global equity, futures, currency and bond markets. So traders may be content with markets staggering sideways until then.

The DAX printed an all-time record high today near 10.3K so traders are already pumping European stocks higher ahead of the QE money bazooka in a couple days. Everyone is expecting a huge fireworks show as Draghi rides in on a shiny new pony firing an enormous QE money bazooka. He had better not show up riding on a donkey waving cheap sparklers and firing a pea-shooter.

Follow the moving averages and support and resistance to gauge the strength of the price move in either direction. Looking at the big picture, the strongest S/R is 2094, 2091, 2088, 2082, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032, 2024, 2018-2019, 2011, 2002-2003, 1998, 1988, 1985-1986 and 1982.

The bears did a good job of buttoning-up the gaps on the way down. There is a gap at 2020-2022 that price started to fill on Friday. There are no other gaps above so price has no reason to venture higher from a gap perspective. The 20-day MA at 2049 and 50-day MA at 2046 are lining out sideways, as the other moving averages are, which indicates sideways behavior for price. Unfortunately for traders, the tight choppy sideways behavior chews up bulls and bears alike. A back kiss of the 20 and 50-day MA's are on the table so the 2040-2049 resistance area cannot be ruled out as an upside target.

Best case for bears is to fill the gap at 2020 to the 2024 resistance, then sell off again and rupture the 150-day MA at 1992. Best case for bulls is to punch up through 2024, then 2032 which will guarantee a test of the 20 and 50-day MA's and the 2038-2049 area. Bears win big under 1988-1992. Bulls win big above 2040-2046. ECB President Draghi just dropped his suit off at the cleaners so he will look his best when he controls the global markets on Thursday morningThis 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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