The SPX support, resistance and moving average levels are provided below. Last week Keystone highlighted the five-year anniversaries of the all-time closing and intraday market tops. On Friday, 10/19/12, the 25-year anniversary of Black Monday in 1987 occurs where the Dow Industrials fell 508 points, -22%. What a day it was.
In the here and now, the SPX closed twenty-one pennies above the 50-day MA so watch this closely moving forward. For Monday, the 1424-1429 is a very strong confluence of support. Thus, the bulls need to remain above to begin a rally. The bears need to collapse down thru and lots more downside will occur. If the SPX falls thru 1425.50 on Monday, and remains that way for ten minutes, the markets will accelerate lower with 1419 occurring in quick order. If the bulls can maintain price above the 1429 level, the 1433 strong resistance will be attacked. Price will either receive a spank down from 1433 or punch up thru which places the 1438-1441 resistance cluster in play. If the SPX punches up thru 1441, an upside acceleration will occur quickly sending price to test 1446 and the 20-day MA at 1429. A move thru 1427-1437 is sideways action.
Think of the uber strong S/R at 1433 as a fulcrum of a seesaw. If the bears are big and strong, the see saw will move to the short side, and price will fall down thru 1424-1429 and plummet lower. If the bulls are big and strong, the seesaw will move to the long side, and price will punch up thru 1438-1441 and rally higher. The 1403-1419 zone is a sturdy support firewall. If it is penetrated, the bulls have major problems on their hands. If 1403 fails, the selling in the markets will move into panic mode. The 50-day MA at 1428.38 and 200 EMA from the 60-minute chart at 1439.56 are major decision makers for the markets and you can gauge the bull versus bear strength by directly following these two critical levels.
In the here and now, the SPX closed twenty-one pennies above the 50-day MA so watch this closely moving forward. For Monday, the 1424-1429 is a very strong confluence of support. Thus, the bulls need to remain above to begin a rally. The bears need to collapse down thru and lots more downside will occur. If the SPX falls thru 1425.50 on Monday, and remains that way for ten minutes, the markets will accelerate lower with 1419 occurring in quick order. If the bulls can maintain price above the 1429 level, the 1433 strong resistance will be attacked. Price will either receive a spank down from 1433 or punch up thru which places the 1438-1441 resistance cluster in play. If the SPX punches up thru 1441, an upside acceleration will occur quickly sending price to test 1446 and the 20-day MA at 1429. A move thru 1427-1437 is sideways action.
Think of the uber strong S/R at 1433 as a fulcrum of a seesaw. If the bears are big and strong, the see saw will move to the short side, and price will fall down thru 1424-1429 and plummet lower. If the bulls are big and strong, the seesaw will move to the long side, and price will punch up thru 1438-1441 and rally higher. The 1403-1419 zone is a sturdy support firewall. If it is penetrated, the bulls have major problems on their hands. If 1403 fails, the selling in the markets will move into panic mode. The 50-day MA at 1428.38 and 200 EMA from the 60-minute chart at 1439.56 are major decision makers for the markets and you can gauge the bull versus bear strength by directly following these two critical levels.
· 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)
· 1472
· 1468
· 1466 (9/14/12 Closing High for 2012: 1465.77)
· 1465
· 1461
· 1460
· 1457
· 1453
· 1451
· 1448.83 (20-day MA)
· 1447
· 1446
· 1445.49 (10-day MA)
· 1444
· 1441
· 1440 (5/19/08 Intraday HOD for 2008: 1440.24)
· 1439.56 (200 EMA on 60-Minute Chart a Keystone Turn Signal)
· 1438.43 Friday HOD
· 1438
· 1435
· 1433
· 1431
· 1429
· 1428.59 Friday Close – Monday Starts Here
· 1428.38 (50-day MA)
· 1426 (5/19/08 Closing High for 2008: 1426.63)
· 1425.53 Friday LOD
· 1424
· 1422
· 1419
· 1416
· 1413
· 1409
· 1406 (5/29/08 HOD)
· 1404
· 1403
· 1399
· 1397
· 1394
· 1391.53 (20-week MA)
· 1391
· 1389
· 1385
· 1384.21 (100-day MA)
· 1382.64 (150-day MA; the Slope is a Keystone Cyclical Signal)
· 1381.21 (10-month MA)
· 1378
· 1375
· 1371(5/2/11 Intraday HOD for 2011: 1370.58)
· 1370
· 1369.45 (200-day MA)
· 1369
· 1366
· 1364 (4/29/11 Closing High for 2011: 1363.61)
· 1363
· 1362
· 1359.72 (12-month MA; a Keystone Cyclical Signal)
· 1358
· 1357
· 1355
· 1351
· 1348.26 (50-week MA)
· 1348
Hello KS, (Sorry for the length of post)
ReplyDeleteI see an interesting correlation on SPX between Oct 7, 1998-Jan 26, 2000 with Oct 4, 2011-Oct 12, 2012 thus far.
In both instances, the uptrend had an initial correction of roughly 68% of the initial move up (Jul 16 1999-Oct 18 1999, Apr 2 2012-Jun 4 2012. Then a 2nd correction Jan 3, 2000-Feb 28, 2000, also 68% of the next leg up. IF the correlation holds true today, we would see a correction to roughly SPX 1350-1370. The big difference between the two time periods are the moving averages and volatility. Volatility was crazy in Jan-Feb 2000 with 60 point intraday swings, but we are not seeing that now. Also, the 13,34,50 seems to be much more above the 200 in Oct 2012 than in Jan 1999, yet the price levels seem to be very closely correlated. In the Jan 2000 correction, there were 3 legs down (5 wave: 3 down, 2 up), each bounced nicely at the 38%, 50% and 62% levels of the previous leg up. For example, in Jan 2000, the SPX bounced off the 50% retracement/200MA on the 2nd leg down. If that were to correlate to the 2nd leg down that we are presently in, that would be a correction to 50% retracement/200MA, or SPX 1370. That is 60 points from where we are now, seemingly unlikely, but anything can happen. The 3rd leg down in the correlation would bring us to SPX 1350ish or 62%.
There are four items that make me skeptical of the correlation following through.
1. the 1st leg down in this current correction only retraced about 20% vs. 38% in 2000.
2. volatility was much higher in 2000 than in 2012.
3. the correction in Jan 2000 was violent with huge swings and lasted 8 weeks. The current correction is less volatile and 8 weeks from Sep 14 high would bring us to Nov 15 area.
4. the current correction could just be a simple A-B-C, if C finishes at roughly SPX 1400 (38%).
Of course, the odds of a correlation continuing depend on whether or not we first retrace to SPX 1400 (retail sales?), and if so, where the reaction rally off of 1400 goes. I feel that if the current leg continues down to the 50% level, then a 5 wave correction is more likely than an A-B-C correction.
I am no expert on EW for sure. I am merely comparing the seemingly high correlation between the 1999-2000 period and the current period to suggest 2 possible outcomes to the current correction. I also believe we are eventually heading to 1520-1580 by Spring 2013, so I am not trying to be bearish with the correction analysis, just simply seeing what could happen.
I would appreciate your thoughts on the above. Thank you for excellent daily analysis.
I think I see somewhat what you're saying, but its rather hard to follow without a chart. I don't have a count of the detail from 1999-2000, but given it's location it is most likely a series of 3,4 unwinds to end the "leftovers" from the bull market. I believe today's action is a large Contracting Ending Diagonal Triangle for [C] of a ZigZag from 2009 of which (2), (3), (4), and (5) are the swings in the area you mention. While it is possible that the 1999-2000 area could have been a Diagonal (again, I haven't looked close), I think it is more likely that the similarities are just a coincidence.
DeletePersonally, I believe the correction from 2009 is over via the pattern mentioned to end II and incredible weakness will follow (i.e. these highs are all it's got for the decades to come).
I also carry a strong bearish bias right now for many reasons, so you'll have to keep that in mind in considering whether that affects my preferred count.
Hope that helps.
Great comments. This is a nail biter. The election swing is everything. Just play your obama vs Romney sectors. And always remember Christmas is an addiction addict junkie thing and first quarter next year will provide blow out earnings again for retail and Apple. This is just the pullback.
ReplyDeleteIf offered a free iphone or free Samsung phone, I'd take the Samsung Galaxy every time. Same for ipad vs Samsung Note 10.1
ReplyDeleteAnon, in the first comment, yes, many times markets will rhyme, that is a fractal correlation you are making which may come to be. Keystone is not an e-wave expert but the pullback on the fourth waves dips below the first wave height so that would not make the respective time frames attractive for an isolated e-wave count, but, of course the action is part of larger wave patterns. To keep it in a simple perspective, noting the SPX price cross versus the 12-month MA, both of the time frames start with price under the 12-mth MA, with markets in trouble, ready to fall over, then they are saved which begins the rallies. The SPX crossed down thru the 12-mth MA in October 2007 that verified the top was in and that lots of downside is ahead, which occurred. The 12-month MA is currently at 1360. Markets are at lofty levels as evidenced on the weekly chart where price is at the upper BB's, just like the dot-com bubble.
ReplyDeleteIf the SPX loses 1360, price will be headed sub 1300 in short order. The market bulls have to maintain 1360 and higher at all costs or they would officially lose their grip and significant extended market and economic trouble will be ahead for months, perhaps years to come. If the bulls maintain 1360 and higher, things may be in a malaise, but the drowning patient will at least be able to keep his head above the water and for markets to muddle along. All hope is lost at 1360.