SPX S&P 500 Monthly Chart 10 MA and 12 MA Crosses

There are two key parameters to monitor on the monthly chart. Many algorithms program these values into the trading models. The 10-month MA is one of the best kept secrets in trading. Old-timers follow it closely and will not readily tell young whippersnappers what they are watching. A rupture of the 10-mth MA is a very serious problem and it occurred today with price at 2089 and the 10-mth MA at 2098. Market bulls must send price immediately above 2098 otherwise stocks will continue deteriorating (for weeks and months).

Long-time followers of Keystone know that the 12-month MA is "the cliff." It is a key signal and indicator for market direction. Market bulls are fine above the 12-mth MA while bears rule the stock market if the SPX is under the 12-month MA which is at 2080, only 9 points away. Extremely bad things will happen to the stock market if 2080 falls; the markets will go off a cliff like Willie Coyote in the Roadrunner cartoons.

Remember, a few charts ago, the high put/calls, and the high VIX, indicate rampant fear and panic so in the near-term (daily time frame) a stock market bottom is likely. So the logical conclusion is that price may bounce and recover from here for a few days or week or two then probably roll back over to the downside for another test of the 10 and 12 MA's.

Of course, any news events can serve as a catalyst for price to jump either way. The Jobs Report tomorrow and the election on Tuesday are two key catalysts that can create market volatility.

If the SPX recovers above 2098, sound the all-clear whistle and stocks are in recovery mode. If price fails at 2080, stocks fall off a cliff into oblivion; there will be carnage and mass casualties. Sideways slop will be the order of the day between 2080 and 2098. 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.