NYA NYSE Composite Weekly Chart 40 MA Cross Determines Cyclical Bull Versus Cyclical Bear Market Pattern

High drama occurred on Friday as the NYA dropped to test the critical 40-week moving average--and price failed. The 40-week MA cross is a key Keystone cyclical market signal which identifies the stock market direction for weeks and months and even a year or three ahead. Note how the market bulls have enjoyed the long-term rally with the NYA remaining firmly above the 40-week MA during 2013 into 2014 and the tests along the way result in intra-week bounces with the 40 MA holding as support.

That ended in October four months ago. Stocks were heading down the rabbit hole and could only be saved by the coordinated central banker collusion that Keystone has explained in detail in prior articles. Note how the indicators were weak and bleak in October (red lines) without any positive divergence in play. This confirms that the move off the mid-October bottom is created by a strong external force which is the global central bankers. The stochastics never even printed in oversold territory under 20. The bankers stepped in because they knew markets were extremely close to falling into collapse.

The historic snap-back rally then occurs launching stocks to new all-time highs in December. The NYA then collapses again and the bears violate the 40 MA once again indicating that stocks are falling down the rabbit hole. And the central bankers come to the rescue again with the exact bottom in December occurring during the FOMC meeting. Fed Chair Yellen sprouts dovish wings in front of the adoring softball-throwing journalists and flies around the room above the masses promising an accomodative Fed forever. Bingo. Stocks launch to new highs to end the year. Thus, two global central banker stick saves have occurred over the last four months. How many more stimulus tricks do the Keynesian central banker's have in their magic bag of easy money? ECB President Draghi coughs and it sounds like he said 'QE' so traders rush to buy stocks trained like Pavlov's dog.

On Friday, the NYA leaks lower and then at about 1 PM EST or so, failed at the 40-week MA at 10782-ish. The bears popped the corks on the champagne bottles since surely the third time is a charm and the cyclical bear will now growl with the latest failure, however, one-half hour later the bears were frantically trying to push the corks back in the bottles as the bulls recovered and sent the NYA back above the 40-week MA. This fight continues. Note the sideways behavior in the RSI and money flow. A major market decision must occur in January (when the triangle squeezes in and ends price must choose up or down), probably late January 1/22/15 through 1/28/15 which encompasses the ECB decision, Greek elections and the Fed decision.

Watch the battle for the NYA 40 MA; it is the most important indicator right now that is going to tell you if this year will be another winner, as all the Wall Street analysts proclaim, or, a loser, as Keystone's 2015 projections currently forecast. As the new week begins, the NYA is 10831 and the 40-week MA is 10782-10785 so a cyclical bull market pattern remains in place for the stock market going forward. If the NYA loses about 50 points and drops under the 40-week MA, it is over for the stock market and the six-year rally is toast. 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.

Note Added on 1/6/15: A few days after this is posted the NYA has fallen like a stone. NYA is at 10515 with the 40-week MA at 10782 so the bears are in charge by 267 points. The stock market has fallen into a cyclical bear market pattern for the weeks and months ahead, perhaps longer. Bulls must send NYA above the 40-week MA, otherwise, they will be beaten day after day moving forward.