SPX Weekly Chart

All the indicators for the SPX weekly chart are weak and bleak (red lines) moving forward. Thus, after any market bounce occurs, the indicators all want to see lower lows in price moving forward.  We watched the rising wedges form, overbot conditions and the negative divergence in September-October, which resulted in the expected price failure.  The 50-week MA is a key support and resistance level, now resistance since it failed last week.  The 12-month MA is 1368-1369, and there is strong multi-year horizontal price support at 1366, so the confluence formed at 1366-1369 is critically important.  The bulls are back in business above 1370, below 1366 the bulls got nothing.

Volume is basing but the selling volume is not out of hand, it is very orderly and consistent on the way down thus far.  The VIX shows a drop in volatility last week so traders still lean towards the bull side of the boat and remain not fully convinced of a significant downdraft occurring. After the May selloff this year, price tested the 50-week MA and bounced. This occurred over a two-week period. Right now we are testing the 50-week MA for one week thus far.  In late May note the lower lows in price over the four-week period. The histogram and stochastics displayed positive divergence that allowed price to bounce from the moving average but the RSI, MACD line and money flow were not fully endorsing the bounce and actually would like to see a test of the 1275-ish area in the future some day. Comparing May's action to now there is not postive divergence whatsoever, only weak and bleak profiles for the indicators. Thus, a market bounce should lead to a roll over and lower prices. At that time note to see if any positive divergence occurs that can provide a more sustainable bounce.

The futures project an opening for Monday of five to ten points so the 50-week MA will be back tested at the opening bell more than likely. Watch the 1366-1369 resistance gauntlet closely today. Bulls win above 1370, bears win if they keep the SPX under 1366. Even if the bulls punch up thru, the weak and bleak picture on this weekly basis will likely act as a weight on price and drag it back down perhaps to test the 1340-1343 level which is targeted as a near term bottom area that may lead to a more sustainable upside rally move.  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.