Wednesday, May 1, 2013

SPX Monthly Chart 12 MA Cross Overbot Rising Wedge

The SPX prints six consecutive months of upside. The mid-November bottom turns out to be a pivotal market turn.  The fiscal cliff resolution to begin the year, and the Fed and BOJ easing, as well as money that was fleeing Europe in January and February, all create the upside. The economic data and earnings show that a robust global recovery is not occurring. China is slowing down which is dragging down copper and commodities. The Transportation Index, a key bellwether, logged a negative month. Nonetheless, the central bankers are determined to pump equity markets and they are succeeding.

 The red rising wedge remains in play. Price popped above in the latest upside orgy due to the BOJ easing. The weak yen has also created the recent optimism in Europe boosting bonds and equities. Negative divergence remains across the indicators. The RSI is in overbot territory and the recent oomph, along with the MACD line, may want to create an up and down jog move as the markets top out and roll over. Volume steadily trails off over time.

 The 12 MA is one of Keystone's key cyclical market signals (reference the Cyclical Signals page) and the bulls have maintained price above the 12 MA for the last half year signaling a cyclical bull market in play.  The October-November 2007 top was verified when the SPX fell under the 12 MA.  The recovery in spring 2009 was verified when the SPX moved back above the 12 MA. QE1 created the 2009 bottom.  Markets faltered in 2010, dropping under the 12 MA, but QE2 saved the day. Then in 2011, failure again, but Operation Twist and the ECB's LTRO 1 and 2 saved the day. Then in summer 2012, failure again, but Draghi pledged to support the euro by all means necessary, following up with the OMT program, and Chairman Bernanke chiming in that he will save the markets with QE3 Infinity, saved the day.  Then failure at the 12 MA again in November, albeit briefly, since the QE4 Infinity and Beyond program, which replaces Operation Twist with outright purchases, saved the day last Fall. What a twisted sordid market it is, purely pumped by the Fed, BOJ and ECB central bankers. Projection is for markets to top and roll over to the 1400's as spring moves to summer. 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.
Posted by at

2 comments:

  1. ArnieMay 1, 2013 at 1:57 PM

    thanks for these BIG picture outlooks and overviews KS. I am long on many tickers, but have been adding shorts as well into my LT account; as a hedge...

    ReplyDelete
  2. Keystone SpeculatorMay 1, 2013 at 2:15 PM

    Large sell offs do not happen often but it would not be surprising to see a large sell off moving forward. Over the coming weeks or months, most expect a simple pull back of maybe 2%, at most 5%. No one is calling for anything over 5%. Since the first four months are up, seasonality-wise, it says the markets end the year higher over 90% of the time so many bulls are hanging their hat on that tidbit. These are uncharted markets with all the central banker intervention so no one really knows what is going on under the surface; how much air has been pumped into the markets for the last four years?

    ReplyDelete

Note: Only a member of this blog may post a comment.

Subscribe to: Post Comments (Atom)