Saturday, June 8, 2013

SPX Daily Chart Moving Average Ribbon

The blue dots show price above the 10-day MA above the 20-day MA above the 50 MA above the 100 above the 150 above the 200. There is no other space above for price to move and this behavior signals a reversion to the mean is imminent, and price receives a spank down each time. Each top is also identified by rising wedge behavior, negative divergence and overbot conditions. The blue circles show how price has reverted to test the 50-day MA four times this year and each test results in a bounce instead of failure.

 The short red lines for the indicators over the last few day show a cheesy bottom for the 50-day MA test since the RSI is the only indicator that shows positive divergence. Note how the indicators are negatively-sloped as compared to elevated price levels from mid-April to now. Lower lows in price are desired but the central bankers keep pumping and the big up in the dollar/yen off its lows on Friday led equity markets higher. Banzai! The volume is unimpressive the last two days considering all the bullish euphoria. The recent price action is creating lower lows and lower highs which is a trend change after the long rally this year thus far.

 Watch the 10-day MA at 1639 creating a support floor, and 20-day MA at 1646 creating a resistance ceiling as a key gauge on market direction forward. Bulls win above 1646. Bears win under 1639. The projection is for the SPX to roll over again either from the 1646-1647 resistance, or 1649-1650 R, or 1652 R. If the test of the 20-day MA at 1646 is successful for bears and a price collapse occurs, the SPX can be back under 1600 in no time. The blue dots identify a reversion to the mean required and this means a return to the 200-day MA, now at 1495 and rising, at some point forward. 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.
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2 comments:

  1. AnonymousJune 8, 2013 at 1:38 PM

    Alert, Alert! ...dear fellows :)
    on spx 500 the upper BB on monthly chart is at ... 1653.62 ! (curiously enough 1653.17 is the 61.8% retracement of the down move from May highest price: 1687)

    I'm outstandigly curious if bulls will pump the index above that level and how much will they resist at that level ? :)?

    V.

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    Replies
    1. Keystone SpeculatorJune 9, 2013 at 5:22 AM

      Yep, monthly SPX chart has pierced the upper band, a trip back to the middle band, at a minimum, the 20-mth MA, is 1430. Monthly chart is negatively diverged as well. On 2-hour chart using intraday May top and intraday June bottom the 1643 is dead-on the 50% Fib retracement. The 62% retracement is 1653 just as V says above so this is an interesting level, further reinforcing the importance of the 1646-1653 resistance gauntlet, this is a big battleground that will tell a lot. So price either moves back down from here, 1643, or will next want to venture to 1653, based on Fibonacci retracements.

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