SPX Monthly Chart with 12 MA Cross Secular Bull Market

The month-end print yesterday provides a new data point for the monthly charts.  Markets remain in a secular bull pattern since price is above the 12-month MA.  This cross is one of Keystone's favorite secular signals to monitor.  Note the secular bear that was in place for those of you that remember ten years ago. That flipped into a secular bull market once the bombs started dropping to begin the Iraq War. The bulls that jumped on the band wagon, like Keystone back then, were rewarded for the war trade.  The market top occurred October 2007 and the SPX crossed down thru the 12 MA a month later to verigy the shift into a secular bear market that resulted in the 2008 market crash.  QE1 in March 2009 signaled easy money and a move back to secular bull markets.

In the summer of 2010, markets were going over the falls. This is when Chairman Bernanke stepped in with QE2 to save the markets and we launched into a secular bull again from August 2010 into July 2011 when price fell thru the 12 MA again signaling trouble.  The market crash last year occurred in August which ushered in a secular bear market but then to start this year, price moved back above the 12 MA once again to lock in the secular bull market now in place.

April, however, logs a negative month, the first for 2012 as seen by the string of five white candles since November and now a red candle.  The 12 MA is 1296 so no matter what type of selling occurs, strong or weak, if the bulls keep the SPX above 1296 they are in fine shape.  If 1296 fails, the markets are in big trouble. Note that the bottom in 2009 was artificially created due to QE1. The indicators were weak and bleak, money flow exhibited only slight positive divergence to help bounce price. This hints that the SPX needs to reexplore the 2009 lows at some point forward.

Note the rising wedge in 2010 moving into 2011 that marked the top last year. The MACD histogram and money flow were negatively diverged creating the spankdown and August 2011 crash but the RSI, MACD line and stochastics wanted to see another price high after a pull back would occur.  We are now receiving, or have received, this higher high in price, and, note that all indicators are now negatively diverged and lined up for the market bears. By their nature, the monthly charts are slow moving covering long distances of time but on a monthly basis, this chart prefers to see lower prices moving forward to satisfy the universal negative divergence. Thus, if the spank down occurs during May, June, perhaps July, watch the 12 MA at 1300-ish, about one hundred handles under the current number. The 12 MA is also moving up so you can treat the 1295-1310 area as the danger zone where markets will flip back into a secular bear pattern.  For now, the secular bulls remain in charge. 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.