Sunday, May 1, 2016

SPX S&P 500 Monthly Chart Tight Standard Deviation Bands to Squeeze-Out Huge Move in May-July Epic and Historic Move Coming

The monthly charts receive a new data point on Friday with the end of April that ended positively. The dark green lines show the tight standard deviation bands squeezing in tight and price is about to either explode higher or collapse lower in the May-July time frame. The bands indicate that an epic market move is coming very soon. Tight bands do not predict direction only that the move will be big; it would be expected that the SPX may move 200-400 handles (in the same direction) over the next couple-three months maybe more. One side is going to be very happy and the other side very sad.

The purple circle shows the Tweezer Bottom and lower band violation that sent price back up to the middle band at 2037, which was achieved and price kept on running higher to 2111 (this year's top thus far). The upper band is 2154 and it has to be left in play going forward. If the central bankers keep pumping stocks and flapping dovish wings price may seek 2154.

The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic; it would be nothing to envision the S&P 500 down to 1100 or even lower in the future as a result of the rising wedge pattern. The central bankers are powerful and keep floating the stock markets sideways preventing any significant collapse.

If you look at the shadow on the right inside that purple circle, that low price print occurs with the indicators remaining weak moving lower. This hints that a solid bottom has not been placed in mid-February and price may want to come back down again until solid positive divergence forms. The SPX price and indicators are trending lower with lower lows and lower highs.

Note the heavy selling volume during December, January and February at levels not seen for five years. The last two positive months of March and April come with lower volume. The bulls are not as excited as the bears.

The ADX was above the 30 level in late 2008 and early 2009 as the financial crisis hit and markets were collapsing. March 2009 is when Federal Reserve Chairman Bernanke turned his back on capitalism and free markets and instead started pumping stocks by printing money. Bernanke also stepped in to save companies. Free markets were destroyed in early 2009. The current Wall Street system is a pseudo-free market style system where only the good side of capitalism is enjoyed (stocks go up) and the necessary down side of capitalism where companies wash out and some go bankrupt (stocks go down) is never allowed to happen again.

The ADX slips under 30 as 2010 began showing that the strong downtrend in the stock market was over. Bernanke had saved the day with his obscene Keynesian easy money that only serves to make the wealthy wealthier (since they own large stock portfolios). The ADX was back above 30 in 2014 signaling that the upside move in the stock market was indeed a very strong uptrend. In early 2015, however, the ADX drops under 30 and is now down to 21 indicating that the strong uptrend in stocks the last few years is over. Long-term bulls would need the ADX to move above 30 again.

The 10-month MA is 2020 and the 12-month MA is 2031 two very important levels to watch. It is negative for the 10 to be under the 12. If price falls under the 12-mth MA at 2031, very bad things will happen to the stock market.

Something very historic and epic is about to happen in the stock market over the next couple months. The expectation would be a sharp and extended move lower, however, the central bankers are the wild card; they can pump stocks at anytime. Price is squeezing upwards over the last two months so May and into June will tell if that is the direction of the huge move, or not. Sometimes price starts to move a certain direction then reverses quickly and the true move is in the opposite direction. The volume, chart indicators, ominous rising wedge and loss of trend as per the ADX are conspiring to say down is the way ahead but the price action will simply have to be monitored here on out each day. 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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