Friday, December 11, 2015

SPX S&P 500 Monthly Chart 12-Month MA Battle

An epic battle is occurring the last few days at the SPX 2052-2054 level. One of Keystone's most important cyclical (weeks and months) market signals is the SPX 12-month MA cross. The stock market is in a cyclical bull market if the SPX is above the 12-month MA and in a cyclical bear market if below. Price is under the 12-month MA at 2052.62, albeit by 39 cents, signaling a cyclical bear market ahead. Obviously, the fight continues.

The 10-month MA is at 2053 another very key level especially watched by the old-timer's. The 50-day MA is 2054. Thus, treat the 2052-2054 level with respect. This is a key support/resistance gauntlet. Bulls win big above 2054. Bears win big under 2052.

The brown circles show distribution taking place. The big up months occur under lighter volume. Ma and Pa Kettle, Joe Sixpack and Aunt Agnes run into the markets caught up in all the hype about bullish markets. The larger sell volume shows the smart money (hedge funds and savvy money managers) ditching their stock handing the bag to these retail investors. Markets always need the sucka's to show up; the bag holders. The distribution events occur into August, when the cab driver bragged that he is placing his entire paycheck into the market on the long side, and Aunt Ethel invested her entire life savings into the stock market. The rug was pulled out. As folks scrambled and panicked looking at the quick losses they sold their shares to the smart money that rode the upside rally back up courtesy of the central banker's easy money. That is how the little guy is rolled.

If you are committed to the long side going forward, each day the SPX is under 2052 is another nail in your coffin. The  longer the SPX is under 2052 the uglier the stock market will become. Of course, if the SPX moves above 2054 and heads higher, the bulls can pop champagne corks since the coast will be clear for the upside again. 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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