Tuesday, July 14, 2015

SPX S&P 500 Daily Chart 150-Day MA Slope

The 150-day MA slope is a very important cyclical market indicator you can use to assess all your current positions. If you are long a stock or index, you want the 150-day MA to slope upwards; if bearish you want the 150 to slope down. This is a cyclical market indicator so it carries clout for weeks, months and sometimes a year or two ahead. As seen above the 150-day MA continued to slope higher over the last few months as the bulls party everyday drinking Fed wine, snorting ECB crack and smoking the BOJ good stuff. The central bankers can throw one heck of a stock market party.

Note, however, the 150-day MA has been flattening (purple box). The market bears need to roll the 150 over to the downside to verify that they are in control for the months ahead. The bulls must recover and turn the moving average higher to resume the upward slope and keep the party going. Watch this signal very closely over the next month; it will tell you a lot about the overall market.

Today price began smack-dab on the 50-day MA support/resistance at 2100. Price bounced off the 50 smacking the bears in the face. Price will want to back kiss the 50 since it is an important moving average. The indicators are long and strong so if price pulls  back another high is likely a couple days forward. Price may be soft through the new moon tomorrow evening. Interestingly, there are no gaps above so price has no reason to move higher.

The market bears were punched in the face in early February, April and May as the 150-day MA hesitated and hinted at flattening and rolling over (purple circles) only for the central bankers to enter markets and pump stocks higher.  Will the bears succeed this time in turning the 150-day MA into a negative slope? By definition, price needs to drop under 2079 (150-day MA) to curl the 150-day MA downwards and place the bears in the driver's seat.

The textbook breakdown out of the red rising wedge pattern is interesting. Note the price failure in ealry June, then price came up for a couple back kisses but could not reenter the wedge, so it collapsed (the back tests were successful for the market bears). The move lower, however, is nothing compared to the mayhem that a rising wedge pattern could create; sub 2000 could easily be expected if the failure of the rising wedge pattern continues. 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 Sunday, 7/19/15: The 150-day MA slopes higher again as stocks rally strongly last week. The bears are punched in the face again.

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