SPX Daily Chart Fibonacci Retracements Bollinger Bands Sideways Channel

The blue lines show the Fibonacci retracement targets for the long four-month rally from early June. The first retracement at 38% is 1400-ish and considering the market bounce yesterday, the SPX has come no where near this level as yet. A move to the 1395-1406 level would be anticipated after the negative divergence smack down started seven days ago.  The black lines show the sideways channel thru 1424-1441 that is in play the last few days.  Price explored this entire range yesterday finishing at the top rail at 1440.  The Bollinger Bands show price violating the lower BB which hints that a move to the middle BB, which is also the 20-day MA, would be in order. This is at 1447.77 and the 1447 is also a strong resistance level.

The circle shows the intraday lows for Friday and Monday. Monday's price low did not take out Friday's low and it leaves an open question as to whether or not it serves the function of a matching low from a divergence perspective.  For the two-day move, the indicators are up which helped yesterday's market bounce but note that the MACD line wants to see another test of the lows in the 1424-ish area occur. The stochastics were oversold which helped bounce the markets as well.  Also, price bounced off the 50-day MA which is a logical place for a relief bounce. The indicators, however, such as RSI, would have plenty of room to move lower, only breaching the 50% level over the last few days. On Thursday, the SPX prints a gravestone doji candle which shows that the bears were very strong. Note the volume on the Thursday up day versus yesterday's up day which shows lower volume participation on yesterday's move with the intraday highs at similar levels.

Projection is for a potential break out of the 1441 upper channel line, and test 1444 and back test the 20-day MA and BB at 1447-1448. The up move appears to be a simple recovery bounce at this juncture; the SPX fell from 1470 to 1425, 45 handles, in only five days. Once the recovery bounce ends, either now at 1441, or at 1444, or at 1447-ish, the downside should resume. The markets remain at the mercy of Europe. When the rumors say that Spain is ready to ask for the bailout, the equity markets bounce, if the rumors say that Spain will delay a request, the markets sell off. It is ridiculous but that is the markets that are in place now. 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.