Keystone's SPX 12-Month MA Cross Indicator 'The Decider' Signals Cyclical Bear Market Watch 1368-1369

Keystone calls the 12-month MA cross 'The Decider' since it is a key gauge as to whether markets are in a cyclical bull, or cyclical bear pattern.  The Cyclical Turn page on this site keeps a running tab on the status.  Last week the SPX fell under the 12-month MA signaling that the broad indexes have fallen into a Cyclical Bear Market pattern.  Of course when a key indicator likes this flips sides, there will be a fight over the coming days where price will decide if it truly wants to remain under the 12-month MA for an extended period moving forward.

The entire rally from 2009 is all built on quantitative easing, stimulus, money-pumping, Chairman Bernake's easy money policy where he said years ago he would drop dollars from helicopters if it meant that he could avoid deflation.  Each stimulus pump created a rally, although the current rally due to the ECB's OMT Bond-Buying program and the Fed's QE3 Infinity have already petered out.  The ECB cannot begin bond-buying until Spain asks for a bailout. The Euro leaders thought this was a given but Spain continually decides to take a wait and see approach.  Thus, when the Spain bailout request occurs, it will bounce the euro and bounce the equities markets.

The indicators are negatively diverged except for the money flow that would like to see price come up a bit again before a complete roll over.  The stochatics are overbot.  Note the steady decrease in volume as Joe Sixpack stays away from these psycho markets and the professional paticipation continues to slacken.  The 1368 level is key, it tells you if the markets will be bearish for the weeks and months ahead, or bullish if price jumps back above.  This morning, Monday, 11/19/12, should provide a key test since the overnight futures are up from 4 to 6 points.  Watch 1366-1369 like a hawk today, the importance of this resistance ceiling cannont be understated.

The SPX should back kiss the 12-month MA, probably this morning, and at this juncture, collapse and failure would be anticipated, the bears receiving a successful back test but look for a continued fight with The Decider moving forward.  The three potential events to rally markets include the Greece decision tomorrow, the upcoming Spain bailout any time from 11/26/12 forward, probably likely in December or January, and resolution to the U.S. fiscal cliff.  The Spain rally would be the strongest, probably 50 S&P handles or more higher since this would begin the ECB bond-buying and equity markets would rally.  Overall, however, all three events will likely result in upside moves that would peter out.  No need to go into all the negatives, every rock you turn over exposes another problem in the global economic and market picture. The thin black line highlights 1258 which was the starting year number for 2011 and for this year. 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.

Note Added 11/19/12 at 8:13 PM:  The Decider decided it liked the bull side again. The SPX jumped above the 12 MA at 1369 indicating a Cyclical Bull Market ahead.