Thursday, September 10, 2015

SPX S&P 500 60-Minute Chart 200 EMA Cross Potential Ascending Triangle

The elevated VIX (volatility) creates the wild up and down swings in stocks intraday and day to day. This behavior continues as long as the VIX remains above 25. The SPX is under the 200 EMA on the 1-hour chart at 2005.88 signaling bearish markets for the hours and days ahead. Remember Keystone told you when the negative cross occurred in August pointing to trouble ahead in the near term. Bears are in control of markets as long as price stays under the 200 EMA at 2006 and falling.

The SPX came up after yesterday's opening bell to attack the strong 1985-1988 resistance gauntlet and was spanked down. (Reference the SPX S/R levels posted on the weekend.) This 1985-1988 level carries clout and serves as a baseline for a potential ascending triangle pattern (green lines). The vertical side of the triangle is about 100 handles so a breakout above 1988-1989 is a big deal. Price would likely run above 2000 and the upside target of the triangle would be 2088 (1988+100). The SPX would be expected to test the 200 EMA in the days ahead at some point.

S&P futures are -10 as this message is typed about one-half hour before the opening bell for Thursday trading. This move would place the SPX exactly on the lower green trend lines which represent the bottom rail of the ascending triangle pattern. The SPX may bounce after an initial selloff after the opening bell holding that lower trend line support. If so, the ascending triangle pattern will receive more clout and the 1985-1988 gauntlet will be tested perhaps for the huge breakout higher. The CPC and CPCE put/call ratio charts previously posted have the door open for a potential stock market rally.

It will be key to see what price does when the lower trend lines are tested this morning. A recovery would be expected if the bottom trend lines hold. The dip-buyers may enter the stock market after the opening bell. A drop under the trend lines and the bears will growl strongly. 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 9:27 AM EST:  On CNBC business television, NYSE floor manager Art Cashin mentioned the higher lows and the triangle pattern presented by Keystone above. Cashin's support/resistance to watch is 1995-1996 on the upside that launches a bull party while 1911-1915 on the downside begins more market mayhem.

Note Added 8:21 AM EST on Friday, 9/11/15: The SPX bounces off the lower trend lines as described above and staggers along inside the ascending triangle pattern. The Fed rate decision is on Thursday, 9/17/15, only five days away.

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