SPX S/R 1/26/12

The following list shows the SPX support and resistance levels as well as the important moving averages.  Once the sturdy resistance at 1316 gave way today, there was nothing to hold price back from moving up to test 1326. The strong resistance levels are shown with underlines; 1329, 1331, 1333 and 1337.  The HOD today stabbed thru the 1327 showing that level to be vulnerable and not much of an issue for the move upwards.

For the SPX for Thursday, if the bulls can push up thru 1328.30, the upside would be expected to accelerate, however, the 1329 and 1331 are no pushovers for price. 1329 would probably give way but price will have to perform yeoman's work to move up thru 1331.  Thus, look for a resistance fight at the 1329 and 1331 levels.

The bears are in complete disarray now. Keynes famously said that 'markets can stay irrational longer than you can remain solvent', which is apropo in these markets. Each day, many metrics point to a pull back but the markets simply take a stutter step before another short-covering upside push occurs, and the broad indexes move relentlessly higher.  The bears simply need to stop the momo and that will begin by preventing the SPX from achieving 1328.30 in the Thursday session. A move thru 1309-1327 is sideways action.

Everything continues to go the bulls way. Volatility dropped as Chairman Bernanke annnounced fresh money printing this afternoon. Therefore, the SPX:VIX ratio we have been watching the last few days, since the VIX is in the denominator, moves higher with low volatility.  The ratio also obviously moves higher when the SPX moves higher since that number is in the numerator of the ratio. Thus, the SPX:VIX ratio closes at 72.42 today well above the 68 danger level. The market bears got nothing unless they move the SPX:VIX ratio under 68.

·        1347

·        1344

·        1341

·        1339

·        1338

·        1337

·        1336

·        1333

·        1332

·        1331

·        1330

·        1329

Wednesday HOD 1328.30

·        1327

Wednesday Close 1326.06

·        1326

·        1323

·        1322

·        1321

·        1320

·        1319

·        1318

·        1316

·        1315

·        1314

·        1312

·        1309

·        1308

Wednesday LOD 1307.65

·        1307

·        10-day MA 1306.54

·        1306

·        1305

·        1300

·        1298

·        1296

·        1295

·        1293 (10/27/11)

·        1292

·        20-day MA 1289.35

·        1289

·        1287

·        1286

·        1285

·        12-month MA 1284.08 (One of Keystone’s Major Secular Signals)

·        1281

·        1278

·        1277

·        10-month MA 1275.60

·        1275

·        1272

·        1270