Keystone's SPX 12-Month MA Cross Indicator Signals Secular Bull Market

Keystone's SPX 12 Month MA Cross Indicator shows the secular market turns. The Iraq War rally began in March 2003. The market top was October 2007. The all-clear for the QE1 rally occurred in March-June 2009. In the summer of 2010, the equities markets were going over the falls when Chairman Bernanke stepped in with QE2. That rallied markets until the August waterfall crash which ushered in a Secular Bear Market that had remained in place for the last five months.

But the secular bulls are fighting back over the last couple days. Price poked above the 12 month MA at 1281.25. Therefore, the markets are in a Secular Bull Market now. Since this is a monthly chart, the print that is needed is month-end, on 1/31/12, to cast the change in concrete. If the SPX drops lower and closes the month under 1281, no harm no foul, the Secular Bear Market remains in place. But if this price loftiness remains thru the end of the month, the Secular Bull Market has taken over. The remaining days this week are extremely important. Watch the 12-month MA to see if price holds above, or fails.

A particularly interesting aspect of the chart is that the 10 MA has pierced down thru the 12 MA which is very bearish and verifies the secular bear case. But, price moved above the 12 month MA nonetheless. This behavior is only similar to the 2008 period. The fractal from early 2008 shows that the markets sold off strongly, then recovered with price returning to the 12 MA, only to then collapse with the long waterfall crash thru 2008. Thus, despite the bullish vibe over the last few days, extreme caution is required in these markets.