SPX Daily Chart Sideways Symmetrical Triangle Bollinger Bands Squeezing In

SPX daily chart shows steady-eddy technical analysis behavior the last couple months.  Late August, the red descending triangle and the black sideways triangle were fighting it out into Dranghi's ECB announcement and obviously the bulls (sideways triangle upside breakout) won as the bond-buying program was  announced on 9/6/12.  Then a two-leg bull flag pattern plays out to the upside with the second leg corresponding to Chairman Bernanke's QE3 announcement.  Now the pink sideways triangle is in play with a firm upper trend line at 1552-1553.  Using the smaller pink triangle, the vertical side is about 35 handles, thus whichever way price breaks is a big deal moving forward.

At the same time, note the Bollinger Bands (BB) that are starting to squeeze in again since the action is sideways over the last couple weeks.  Interestingly, the apex of the triangle corresponds to the projection of where the BB's will be at the tightest area which will squeeze out a very strong price move either up, or down, and likely moving the 35 handles mentioned above.  The upside target would be 1452+35 = 1487-ish (1485 is very strong resistance). The downside target would be 1447-35 = 1412 (the 50-day MA is 1418-ish). Thus, a major market directional decision should occur over the coming days, say, now thru next Wednesday, 10/10/12, more likely sooner. The indicators are a mixed bag reinforcing the sideways price movement theme.  Volume is steady. The 10 and 20-day MA's are on top of each other so the 1447-1448 level is very strong support. Bulls are happy above 1448 while bears will be happy under 1447.

The above chart says the relative recent calm sideways action in the broad indexes will give way to a wild market move. Perhaps the Monthly Jobs Report will provide that catalyst. There are many other possibilities.  Look at the Flash Crash potential now in the markets considering the KFT trading action yesterday. The Middle East is in conflict. Turkey is now firing into Syria. The HPQ news should create a drag on the tech sector. The debates result in a horse race for president now which increases market tensions as well.  And, of course, the ongoing European drama especially the hourly rumor that a Spain bailout is imminent. Sometimes the sideways triangles may stretch and morph themselves out further sideways so into next week we will see if that occurs, or not. There are key Euro meetings occurring in the coming days which may serve as focal points. A stretching out of the sideways triangle does not change anything, only that the strong move may occur middle to late next week rather than anytime now thru early next week.

A news item or economic release should occur anytime from now into early next week that will act as a catalyst sending markets up towards the 1480's, or down to the 1410's. SPX major S/R is shown by the blue lines; 1496, 1485, 1476, 1472, 1468, 1460, 1447, 1440, 1424, 1419, 1416, 1413, 1409, 1406, 1404, 1403, 1394 and 1391.  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.