SPX Support, Resistance (S/R) and Moving Average Price Levels for Trading the Week of 9/17/12

SPX support, resistance, moving average and other levels of import are provided below. Friday's high of 1474.51 takes out the 2008 intraday high for that year and officially places the SPX at a five-year high with levels not seen since the final days of 2007. SPX 1468.36 is the starting year number for 2008. Chairman Bernanke fired the super deluxe bazooka on Thursday which results in, what seems to be, 99.9% of traders now on the long side, expecting 1500 to appear in short order. Traders are completely complacent now and have zero fear since Bernanke's actions say he supports the markets 'to infinity and beyond'; Ben 'Buzz Lightyear' Bernanke, if you catch the reference.

Let's outline the market bull case for the markets moving higher as now universally expected by everyone, including the cab driver and shoe shine boy. On Monday, if the market bulls punch thru the Friday high at 1474.51, price will move thru the strong 1476 R and fill the gap at 1478. At that juncture, 1479 will provide strong resistance, if it fails, the bulls move to 1485, then a gap fill at 1496, which would lead to the 1500 plus level. Keystone is not expecting this outcome but the market behavior for the days ahead are important.

For Monday, the bears need to push under 1460 which would initiate a downside acceleration of several handles, with price fully capable of moving towards the 1446 support level within a couple days time or less, then lower. A move thru 1461-1473 is sideways action to start the week.

"Don't fight the Fed" is a tried and true axiom that stands true for decades. Why would QE3 be any different?  Perhaps because previous Fed moves occured when markets were beaten down, such as on the verge of a deflationary spiral when QE1 and QE2 occurred, so the markets had lots of upside ground to gain. For QE3, the markets are already at a significant top. It is never wise to go against Keybot the Quant and the algorithm remains long but as mentioned in Friday's late afternoon comments, the weak utilities sector is a very ominous signal and typically precedes a substantial market decline. UTIL must be above 478.48 all week long for the bulls to push markets higher but it begins at 472. Trannies have not yet moved above the July highs let along multi-year highs, continuing to not verify the upward move in the broad indexes.  The uber low CPC and multi-year lows for the VIX are screaming that a Significant Market Top is now in place. Stay tuned.

Do not take these markets for granted. The move down may be quite dramatic.  Voaltility should jump higher and remain high thru the end of the year so the moves in the broad indexes will become far more violent with large intraday moves on tap testing the will of traders on either side of the trade. At this juncture, Keystone is negative on the markets and expecting a strong pull back any day, which will create some signficant downside damage, perhaps leading to an excellent market buying opportunity in October (therefore prepare a shopping list for longs for October). If Keybot turns bearish early this week, that would seal the downside deal. If long players hang on to all their longs without worry, they will likely regret that decision one month from now, even though 'don't fight the Fed' repeats in all trader's heads.

·         1576 (10/11/07 top)

·         1565 (10/9/07 top)

·         1553 (10/31/07 top)

·         1524 (12/11/07 top)

·         1520

·         1518

·         1516

·         1511

·         1505

·         1500

·         1499 (12/26/07 top)

·         1496 (12/27/07 gap fill needed: 1495.05-1496.66)

·         1489

·         1485

·         1481

·         1479

·         1478 (12/31/07 gap fill needed: 1475.83-1478.49)

·         1476

·         1475 (9/14/12 Intraday HOD for 2012: 1474.51)

·         1474.51 Friday HOD

·         1472

·         1468

·         1466 (9/14/12 Closing High for 2012: 1465.77)

·         1465.77 Friday Close – Monday Starts Here

·         1465

·         1464

·         1460.07 Friday LOD

·         1460

·         1457

·         1455

·         1453

·         1448

·         1446

·         1444

·         1441

·         1440 (5/19/08 Intraday HOD for 2008: 1440.24)

·         1438

·         1435

·         1431.00 (10-day MA)

·         1431

·         1429

·         1427 (5/19/08 Closing High for 2008: 1426.63)

·         1424

·         1422

·         1420.79 (20-day MA)

·         1419

·         1414.45 (200 EMA on 60-Minute Chart a Keystone Turn Signal)

·         1413

·         1410

·         1406 (5/29/08 HOD)

·         1403

·         1399

·         1394

·         1392.62 (50-day MA)

·         1391

·         1389