SPX Daily Chart Lower Highs Lower Lows Gaps S/R

SPX daily chart showing volume by price candles on the left side to help identify key support and resistance. SPX S/R numbers are highlighted below and will be posted in the next blog post to set up Tuesday's trading.

The long candle focuses on the 1329-1341 zone--exactly where we are at now. The bounce last week from 1312-ish occurred without a test down to the April lows, and also without any positive divergence to create the bounce, except for a smidge of positive divergence with the money flow. Note the green bars that show the indicators weaker with price higher. Picture this as a weight hanging on price trying to pull price down. The gap fill at 1312-1319 and the smidge of money flow positive divergence helped create the bounce, but the Fed's POMO pumps and expected holiday buoyancy did the heavy lifting.

Note the other open gaps lower that will require filling as well as tiny gaps at 1320-ish and 1327-ish from the bounce last week. The black lines show the downward channel in place now and the lower lows and lower highs. Note the two tiny gaps in this current area that can fill and still maintain the lower high trend in place. The tiny gap above at 1360, however, is reminiscent of the tiny gap at 1340 left behind in February which told us that the SPX had to come back up for, which the index did in April.

Thus, the 1341-1343 gap fill area is currently in play but the bears are still in the game even if this occurs. If price moves above this 1341-1343 area, lookout above, price will probably head up to fill the 1360 gap.

RSI under 50% favors bears so keep an eye on that as well as if the 20 MA crosses down thru the 50 MA which would be bearish. Watch for the gap fill at 1333-ish which also is resistance from the top rail of the downward channel. Should price get above there, watch that 1341-1343 gap fill area as discussed above. Bears have the upper hand currently despite last weeks bounce. Volume participation continues to trail off so bulls show no real conviction. Price parked itself at the 50 MA for the Memorial Day weekend as it makes a decision.

Key SPX Support and Resistance:

·         1341

·         1338-1339

·         1337 (strong S/R)

·         1335-1336 (1336 important)

·         Friday HOD 1334.62

·         1331-1333 (very strong S/R)

·         1329 (very strong S/R)

·         1325-1327 (very strong S/R; 1326 important)

·         Friday LOD 1325.69

·         1318-1323 (very strong S/R zone; 1319 important)

This information is for educational and entertainment purposes only.  Do not invest based on anything your read or view here or any links attached to this information.  Consult your financial advisor before making any investment decision.