SPX S&P 500 Weekly Chart Tight Standard Deviation Bands Squeeze a Move Lower in Price

The SPX weekly chart was posted a week or so ago and the tight pink standard deviation lines (pink arrows) were highlighted since a major move was coming. Tight bands, however, do not foretell direction, only that the price move will be big one way or the other. The SPX has only had this tight of bands two other times once in 1966 which was the end of a bull market and in 1994 which ushered in volatility. The bands were tight back in the summer of 2011 which resulted in the August 2011 waterfall crash but those bands were nowhere near the tight bands now.

The tight band squeeze occurs and price squirts to the downside. The lower band is 2029 and price is currently a huge 60 points lower a massive displacement. Price will need to revert to the mean (higher). The middle band, also the 20-week MA, is 2094 and dropping and is in play since the lower band was violated. Price will eventually want to come up and touch the middle band so that may occur anywhere between 2030 and 2090. Price has not back kissed the 200-week MA since late 2011.

The Chinese stock market drama is affecting US stocks these days so decisions by the PBOC will influence the SPX direction. The epic Federal Reserve rate decision that will create huge market theatrics is on Thursday, 9/17/15. Fed Chair Yellen will decide the entire fate of global markets. The epic up and down erratic market behavior occurring now should continue into October.

The red lines show the neggie d spankdown Keystone described as it set up and occurred over the last few months. Note that the indicators are all printing lower lows, weak and bleak, wanting to see further lows in price after any bounce would occur. The VIX is up near 30 so the point moves in the stock market will be very large going forward both intraday and day to day. Thus, a big rally may occur shooting the SPX up over 2K again but the elevated VIX could very well flush the SPX straight back down the next day or two by a big amount, and then up hugely the day or two after that. You get the idea. Check the seat belt on your computer chair since you may need strapped in for the ride. The weekly chart above hints that stocks may remain weak into Fed Chair Yellen's rate decision on 9/17/15 which will obviously be a key pivot point. 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.