Tuesday, September 15, 2015

SPX S&P 500 Daily Chart Sideways Triangle Developing

The broad market topped in May with the SPX at 2135. Stocks print a quadruple top iwth peaks in April, May, June and July, all failing. The brown sideways triangle broke to the downside with a target at 2000-ish which was easily achieved. This level is also a test of the black trend line which failed. The tight standard deviation bands forecasted a huge move about to occur in mid-August and the move was lower with a waterfall mini-crash.

The lower standard deviation band was drastically violated so a reversion higher was needed that helped create the initial bounce off the bottom. Price then wants to seek the middle band, which is also the 20-day MA at 1972 and falling and intraday it was touched four days ago. Another touch may be on tap as the 20 MA falls into the 1950-1972 range. The neon green lines show a sideways triangle pattern forming. The Fed rate decision is Thursday afternoon so  four more candlesticks will print leading into the epic announcement. If the triangle remains in play, and say price is at 1950-ish into the Fed, an upside move will target 2070 and downside will target 1830. The stakes are high. There is no way to know the outcome since Fed Chair Yellen controls the stock market and her decision on rates will likely create the violent move either up or down.

If the Fed was not in play, the chart indicators favor the bulls as they show a long and strong profile. Watch the RSI since bulls will be running higher with a relief rally into the Fed if the RSI moves above 50% but bears will keep stocks weak into the Fed with the RSI under 50%. 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 9:19 PM: The SPX rallies strongly up 25 points, +1.3%, to 1978. The 20-day MA is 1966 so price makes it up through the first major moving average resistance level. The daily chart indicators remain long and strong so price should print further highs after any pullback would occur in this daily time frame. Price breaks out of the sideways triangle pattern to the upside so bulls are joyous. Watch for price to try and break through the base lines of ascending triangle patterns with the base lines at 1985-1988 and also as the above daily chart shows 1990. Thus, the 1985-1990 level is a strong resistance gauntlet. Bulls win big above 1990. Bears remain in control of the game under 1985.

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