Wednesday, July 8, 2015

SPX S&P 500 Monthly Chart 10 and 12-Month MA's

The SPX monthly chart remains bearish. The top was described as it occurred and the rising wedge, overbot conditions and negative divergence provide the downside spanking off the top. The 10-month MA and 12-month MA are two of the most important market signals. The 10-month is followed by old timer's; they don't talk about it much since there is no use to let the young whipper-snappers know too many secrets. Many algo's have the 10 and 12-month MA's programmed.

A failure of the 10-month MA at 2061 indicates serious market stress in play. A failure of the 12-month MA at 2049, which occurred today, is huge trouble. The blue boxes show how the central bankers ran to the rescue to save the day once these critical levels began failing. The same think will likely be tried again.

The red circles show distribution taking place since last summer. After an up month, the retail sucka's are sucked into going long from the hype on television and in media. The professional's then step in and distribute their shares to Ma and Pa Kettle and their nephew, Joe Sixpack. Like taking candy from a baby. The sell volume is higher as the smart hedge funds and other astute market players are exiting the back door in a methodical fashion as the retail investor runs in buying shares like an idiot. Pundits keep cheer leading dividend stocks that are down about -8% in a solid downtrend since December. It will already take 2 or 3 years for investors to regain the capital loss with the dividends. Aunt Tillie bot utility stocks at the beginning of the year because the guy on television said they were a sure bet with a dividend. Tillie is now eating cat food for dinner.

Watch SPX 2049; it is for all the marbles. Extremely bad things happen to the stock market under 2049 including a potential crash or stocks at least going into free fall. If the SPX moves above 2049, the bulls plan on conducting a relief rally higher. If stocks move higher watch the price behavior at the 10-month MA resistance at 2061 since price will either bounce or die from that level.

As has been highlighted over the last few months, the current highs in May-June may serve as a long-term multi-month and multi-year market top. If not, then the multi-year top would be expected within one to three months. The distribution above shows the smart money has already planned ahead. Are you the smart or the dumb money? 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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