SPX 1-Hour (60-Minute) Chart 200 EMA Cross H&S and Inverted H&S Patterns

The 200 EMA is 1499.29 and serves as a critical bull-bear line in the sand. Bad things will happen to the broad indexes if 1499 fails. The bulls have no worries above 1499. The red and green circles show the signals from the 200 EMA, the sell off in October 2012, and recovery in November. A stutter step occurred as last year ended, where the markets were staring over the edge ready to collapse, but the politicians kicked the fiscal cliff can down the road and the drunken market rally began.  Another test of the 200 EMA in the days ahead is prudent. If the 200 EMA fails, that is where, even if you are gun-ho bullish, you should look into buying a bear suit.

The H&S shows the head at 1531, neck at 1495-ish, target at the low 1460's if 1495 fails. The negative divergence (red lines) clearly shows the smack downs in October and last week. Keystone does not like to use inverted H&S's as markets are topping or at lofty levels, regular H&S's as shown above are far more important. Conversely, after a stock or index moves down for a long time, the inverted H&S's are key in determining the basing moves for stocks. However, since many technicians will wave the inverted H&S's at any time, they must be expolored. The brown inverted H&S shows head at 1350-ish, neck at 1450-ish and target at 1550-ish. So those of you looking for 1550 have this pattern as ammunition. The purple inverted H&S is head at 1350-ish, neckline at 1470-ish, which would target 1590-ish. The projection currently is that these targets at 1550 and/or 1590 would not occur but with Chairman Bernanke dropping money from helicopters, the sky may be the limit. Look at how Bullard's words created 13 S&P points on Friday. These markets love crack cocaine, they are addicted, fundamentals be d*mned, simply watch how much crack is being pumped into the market's veins.

The red rising wedge and negative divergence should create additional downside moving forward and another test of the 200 EMA would be anticipated in the near future. 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.