SPX Daily Chart Fibonacci Retracements Megaphone Pattern

The bulls launched price above the top rail of the black megaphone expansion pattern. The thin black line shows how the intraday price held this trend line so far.  A large up day will likely nullify the megaphone pattern.  The bears must come to play today, otherwise, the bulls are going to start running strongly higher. The green line shows the uber strong 1433 resistance that held yesterday as the bulls tried to punch thru with two +1000 TICK's, but could not. So 1433 is important. Note the rising red wedge in play (a bearish pattern) with the apex on top of the 1433 as well. The indicators show the stochastics, histogram and money flow negatively diverged wanting to see a spank down in price. The RSI and MACD line, however, are long and strong wanting to see another matching or higher high after the pull back occurs. Thus, the neon green line in the margin shows a potential outcome for the days ahead. However, with the Fed on tap today, the markets continue to be a crap shoot with anything possible from lunch time on.

The bulls have the upper hand and a move above 1433 would lead the way to the 1440's. The 1441 and 1446 levels will put up a fight but if the bulls continue up thru 1446, the 1460-1461 will be hit in short order. The Fibonacci retracements show that the 62% Fib at 1424, was violated yesterday. This lights the way to far higher numbers if the 62% Fib cannot contain price. Today is pivotal since the bears have to spank price down, otherwise, the SPX staying above 1424 leads to higher numbers ahead.

A floor in the markets exists at 1340-ish due to Draghi's 7/26/12 proclamation that he will support the euro by all means necessary. The mid-November bottom came down and bounced from the Draghi bottom.  The SPX regained the 1403+ level which corresponds to the ECB's OMT announcement but remains shy of the Fed's QE3 Infinity announcement at 1438. This is very odd since all traders expect the fifth major push of stimulus to occur today, QE4 Infinity and Beyond, or whatever they plan to call it. The first three QE's, QE1 in 2009, QE2 in 2010, and Operation Twist and the ECB's LTRO 1 and 2 in the Fall 2011, all resulted in large upward market moves. This trend is no longer in place, however, since the last QE, the ECB's OMT and Fed's QE3 Infinity, resulted in a market rally before the official announcements and a sell off after they occurred, the stimulus only maintaining the SPX higher at 1438+ for about 5 weeks. The recent action is similar with the markets now rallying from SPX 1350-ish up to 1434 yesterday, over 6%, before the actual announcement occurs, which is today.

All bets are off until the Fed announcement today. The bulls are looking for 1429, 1433, 1441, 1446 and onward to 1460-1461.  The bears are looking for 1419, 1416, 1413, 1409, 1406 and 1403.  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.