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Monday, May 28, 2012

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

A look at another one of Keystone's fave secular charts (reference the Secular Signal page on this site), is the SPX price cross of the 12-month MA which identifies secular bull versus secular bear market patterns.  No need to recap the same stuff as the NYA 40-week chart just posted for the 2009 to present time period, the same shpeal applies.  This chart shows the secular bull that started when the first bombs hit for the Iraq War in March 2003.  Seasoned traders such as Keystone knew the war trade was in place and were positioned uber long with a smart trade, as others worried over the coming global conflict and either went short or stayed neutral waiting to see what happens. Shamefully and sadly, war is money. The SPX then sliced down thru the 12-month MA at the October-November 2007 market top signaling that the party was over and a new secular bear market had begun.

Of interest on this chart is the weak and bleak profile in late 2008 early 2009. The market bounce occurred due to the QE1 money printing. Chart-wise, this profile says it wants to see the lows in March 2009 tested again at some point in the future. Are folks prepared to see prints of 600 and 700 for the S&P 500 again? Time will tell. The negative divergence now in place created the spank down we are now experiencing.  The month-end prints occur at Thursday's close this week so this chart will receive a new data point.  Bad things happen if the SPX prints below 1293.61. The SPX would fall into a secular bear market, verifying the move by the NYA 40-week MA cross, providing street cred for market bears, and big trouble for markets moving forward. The 10-month MA is also important and note that the 10 MA has been under the 12 MA for several months and this is a bearish signal. Since the month-end print only allows three days of trading until the number is cast in concrete, look for high drama in the 1291-1296 area this week.  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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2 comments:

  1. Springheel JackMay 29, 2012 at 4:56 AM

    I'm slightly confused by your terminology here. I would normally understand a secular bull or bear market to be an overall period like 1966-82 (secular bear market)or 1982-2000 (secular bull market) whereas the individual bull or bear markets within those periods would be described as cyclical bull or bear markets.

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  2. Keystone SpeculatorMay 29, 2012 at 6:20 AM

    Hello springheel, yes, the terminology is mixed and there are no clear definitions agreed upon. Keystone agrees with what you are saying especially in respect to the 18-year cycle, but the terminology for these charts use the secular term for lack of a better word.

    VST trading, very short term, minutes, hours, days
    ST trading, short term, hours, days, weeks
    IT trading, intermediate term, days, weeks, months.
    LT trading, long term, weeks, months, years.
    secular, long term typically multi-year time frame
    cyclical, multi-month or multi-year pattern within a secular time frame.

    Do not get too caught up in the terminology, perhaps over time Keystone can develop a better name, or use cyclical or long term as the description, or multi-month.

    Time frames are probably the most difficult thing to reference in cyber space. Many times two traders will argue over where a stock is headed but once they realize that one trader is thinking days, and one is thinking weeks, they both can be correct.

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