SPX Daily Chart H&S Bear Flags 150 Day MA S/R

We watched the H&S patern unfold this summer, working out in textbook fashion hitting the target in August (blue lines). The pink bear flag was in play until the big rally in October nullified the pattern. The neon green bear flag remains in play although it is a sloppy flag. Nonetheless, should price move down from here, the 1040-1060 area would be targeted. Note the long horizontal blue line which is the neckline for the H&S and also important sturdy S/R at 1260-ish all year long, which price tested late last week and failed.

The 150 day MA is also at 1261 which highlights this 1260-1265 area as an important confluence, price committing above or below this level is extremely important. The 150 day MA slope is one of Keystone's Secular Signals. Note the respect that price shows for this MA (grey circles) and this is where price sits as of this writing. The 150 day MA sloped upwards from 2010 into August 2011 (grey arrow), peaked, and turned downwards. This signals that the markets have fallen into a Secular Bear Market pattern as of early August.

The red lines show the negative divergence top that created the spank down in May as Keystone projected, then, conversely, note the positive divergence bottom (teal lines) creating the bounce in early October. Price action now shows a sideways posture with four critical S/R levels; 1285 (late October highs), 1260-ish (the H&S neckline, 150 day MA and horizontal S/R confluence), 1238, and 1220, price now in the middle with 1260 and 1285 R above, and 1238 and 1220 S below. Simply watch price action moving forward in relation to these four S/R levels. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.