SPX 60-Minute Chart 200 EMA Sideways Channel Head and Shoulders Patterns

The SPX came within pennies of the all-time closing high at 1565.15 when the Dutch finance minister dropped a tape bomb.  The long red candle shows the result with the SPX dropping ten handles on that news within that candlestick.  The light blue lines show the H&S that was in place but the bulls spoiled that with the thrust higher at yesterday's open. However, the lavender lines show a new H&S basically with the same levels, which will need a right shoulder perhaps this morning if the markets move higher. The head is 1565, neckline 1540, target 1515. The red lines show a sideways channel in place through 1540-1565 for the last month. Yep, the SPX has bounced through this narrow 25-handle range for one-month's time.

As the SPX marched higher yesterday printing a new high for 2013 at 1564.91, the purple lines show the negative divergence in place that created the spank down using the Dutch comments as a catalyst. The indicators now have a sideways vibe forward reinforcing the continued move through the sideways channel.  Volumes should lighten as the week moves along with the Friday closure ahead. Plus, this last week in March is typically up, and the full moon is tomorrow where markets are typically buoyant, and the pre-holiday joy typically sends markets higher as well.  Window dressing for quarter end typically creates market buoyancy, however, with the quarter record-setting to the upside, the funds have nothing to prove with the quarterly statements this time around, they are all up, so window dressing effects may be muted. When a month is strongly higher, such as March, there is a tendency to finish weak so the bears have a feather for their cap, albeit a tiny one. Thus, if the bears want to make a move lower, today will be key. Of course, if the Cyprus bank runs are ugly and the Europe situation worsens, especially if the banks weaken, this ugliness will likely override the bullish seasonality factors highlighted.

The 200 EMA at 1235 is the key item on the 1-hour chart and dictates if the bulls or bears are in control.  Price is above the 200 EMA so the bulls are in control.  Price will drop under the 200 EMA at some point forward signaling the bear's turn. The failure of the 1540 neckline would place the 1515 target in play and if 1540 fails, it is likely the 200 EMA will fail in short order. For now, the SPX continues bouncing through 1540-1565 sideways channel. 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.