SPX Monthly Chart with 12 MA Cross

A key secular indicator Keystone uses is the SPX monthly chart where price crosses the 12 MA (reference the Secular Signal page on this site).  This signals the switch from bull to bear markets and back again.  The NYA 40-week MA cross was highlighted earlier this week.  It has failed already signaling that markets have fallen back into a secular bear market pattern.

This chart shows the start of the Iraq War Rally in March 2003 when price popped above the 12 MA.  Then the October 2007 market top.  Then as markets were crumbling into the Great Depression redux, Chairman Bernanke saved the day with QE1 in March 2009. Markets were in a seular bull until summer of 2010 when deflation raised its ugly head again and markets were going over the falls.  Bernanke to the rescue once again with QE2 in August 2010. That saved markets keeping them in a secular bull market.  Then last August, the waterfall crash thrust markets back into a secular bear market.  This caused the Fed to act with more fancy gimmicks, Operation Twist and all the rest, but the key was the ECB jumping into the act with LTRO1 and announcing that LTRO2 was on the way as well. This bounced markets back into a secular bull again with the wine flowing like water this year. Easy times on easy money, until now.  Note how the chart clearly shows that this is simply a market that moves up when the printing press operates and money is being thrown from helicopters, but then deflates when the easy money peters out.

The SPX is on the verge of failure where bear markets will be sustainable for an extended period forward. The chart shows the 12 MA now at 1292, that is the line in the sand. The SPX is now printing 1296. High drama indeed. Note the negative divergence in place across the board that Keystone has pointed out the last few weeks, that is nasty and caused this smack down. Watch 1292 from here forward. 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.