Sunday, March 13, 2016

SPX S&P 500 Monthly Chart

The big stock market rally continues with the SPX up to 2022 only 7 ticks from the coveted 12-month MA at 2029. The 12-month MA is a major cyclical market signal. The stock market currently remains in the cyclical (weeks and months) bear market pattern but that will revert to a cyclical bull if the S&P 500 moves above 2029.

In October 2007, the neggie d spankdown occurs and stocks slip into a cyclical bear market through 2008 well into 2009. Former Federal Reserve Chairman Bernanke started the sick Keynesian path we remain on with QE 1 (quantitative easing) in March 2009. The central bank creates a cyclical bull market into mid 2011 when cracks form in the market once again as the stimulus runs out. The back half of 2011 is a quickie cyclical bear market but the global central bankers are colluding at this point and create a massive cyclical bull market from 2012 into 2015. The central bankers and their money printing presses are powerful, however, they shamefully destroy their nations looking out a decade in the future.

The SPX is jogging above and below the 12-month MA since last summer unable to make a decision until this year firmly rupturing the 12-month MA, Keystone calls it the cliff, and stocks collapsed. Now you understand the importance of this 12-month MA. Seasoned technicians pay a lot of attention to it plus the 10-month MA which is at 2016. Considering the importance of the 10-mth MA, it would be a reasonable expectation for price to come down to back kiss the 10-month at 2016 and make a critical bounce or die decision.

Keystone described the market top as it formed early last year and the knock down occurs from the negative divergence, overbot conditions and ominous rising wedge patter. Remember, the collapses from rising wedges can be quite dramatic. The stochastics and money flow are weak and bleak so it is reasonable to expect lower lows for price in the months ahead. The 2029 level will determine if stocks roll over this month and begin descending again, or, above 2029, stocks may play around at elevated levels for March-May before likely rolling over and heading back down again.

The SPX weekly chart indicators are long and strong so stocks may take a breather for a few days or week and then continue higher above the SPX 2029 towards 2050. In October 2007, stocks topped out and then one year later in September-October 2008 the crash began. Adopting this fractal to the present day, stocks topped out in May 2015 so a drastic flush lower is on the table beginning in April-May. It would not be surprising at all to see the SPX collapse to sub 1400 in the months and year or two ahead.

If Keystone places his Merlin hat on his head and sprinkles magic voodoo dust on the above analysis a potential scenario is stocks topping this week in the daily time frame (MACD line has a bit more juice on the daily chart so perhaps a top when the FOMC decision occurs on Wednesday). Then a flush lower into early next week which is shortened by the Good Friday holiday going into Easter weekend. The weekly SPX chart points to higher highs. A full moon occurs on Tuesday 3/22/16 which may create buoyancy in stocks and equities are typically bullish moving into the three-day holiday weekend. So the 3/22 to 3/24 trading may be bullish based on seasonality which may kick back in the weekly chart bullishness.

On the monthly basis as described above, stocks would be expected to roll over again to the downside say beginning in April-May after the bullishness on the weekly chart plays out. 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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