Wednesday, March 11, 2015

SPX S&P 500 Daily Chart Lower Band Violation

The SPX sells off Tuesday in force sending price under the lower standard deviation band at 2057 so the middle band at 2095 is in play (pink). Price may play out similarly as the fractal in December (brown circle). Note the first violation of the lower band back then sent prices immediately back to the middle band then further downside continued. The central bankers saved the day as usual with jawboning resulting in the vertical spike in mid-December so listen for any happy Fed talk today or tomorrow.

Price lost the 50-day MA at 2061 so that is the first test of resistance for price. If the bulls take that out to the upside then price will seek the middle band, also the 20-day MA at 2095, as the next upside target. Bears need to hold the line at 2061 and weakness will resume. The stochastics are oversold wanting to create a quickie relief bounce which appears on tap this morning but all indicators remain weak and bleak desiring lower lows in price after any bounce. The only thing that can change this negativity is the Fed pumping the markets with happy talk which is what typically happens.

The long red lines identified the negative divergence top as Keystone pointed out several days ago when it formed. Volume is strong for both Friday's and yesterday's selling comparing back to late January and early February. It will be key when price moves below current levels since these are the same levels as early February and will provide a direct comparison in volume and show whether the bears have downside juice, or, if the volume trails off allowing for the bulls to recover easier. Watch the 50-day MA at 2061 as the key market metric for the next couple days. Also pay attention to the critical 20-week MA at 2055.76. 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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