Tuesday, March 29, 2016

SPXA150R S&P 500 Percent of Stocks Above 50-Day MA and SPX Weekly Charts

The number of stocks above their 50-day MA are above 90 nearly at 92 an uber multi-year high. The dramatic rally has great momentum as traders are buying any stock with a heartbeat. The red circles show what happens when the bullishness becomes excessive. What do you think will happen?

The red lines show how stocks continued to rally from late 2014 through 2015 but the SPXA50R was decreasing. This divergence was a clear warning of trouble coming. Keystone also monitors the SPXA150R and SPXA200R. If the SPXA150R prints above 70%, markets are getting ahead of themselves. Every few years the SPXA150R may move above 90% when that occurs you definitely want to be all-in short as Keystone pointed out two years ago which led to the stock market collapse in September 2014.

The SPA50R chart above is a weekly chart so the expectation would be for markets to top out on this weekly basis very soon and pull back.

Watch the H&S pattern shown by the dark red lines on the SPX chart. Price is printing a right shoulder right now. The neckline is 1880 and the head is 2135 which is a 255 point difference. Thus, the downside target would be 1625 if the neckline at 1880 fails. 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 5:11 PM: The SPX finishes the day up 18 points, +0.9%, to 2055 a new closing high for this year. The analysis above does not change.

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