SPX S&P 500 and SPXA200R Stocks Above 200-Day MA 5-Year Charts

There is a lot of spaghetti to sort out in the charts above. Keystone called the top in the SPX weekly chart a couple weeks ago, which occurs. The rising wedge pattern, overbot conditions and negative divergence conspire to slap price south. The RSI, however, is trying to help create a bounce in the near-term.

Price violated the upper standard deviation band so a move to the middle band at 2421 was on tap, which occurs. The S&P 500 is in a big fight at the 20-week MA support at 2421 (the 20 MA is always the same as the center standard deviation band). The 100-day MA is at 2418. Thus, this pivot point at 2418-2421 is extremely important. Market bulls win big above 2421 while bears win big under 2418. Price was extended above the moving averages needing a mean reversion lower and price comes down to kiss that 20-week MA.

The breadth of the market is trailing off like it did prior to the May 2015 stock market top. The number of stocks above the 200-day MA are decreasing as the hype, euphoria and market joy continues sending equity prices higher.

The SPX lost over 200 points from May to September 2015. Note the W pattern bottom in blue. W's are very powerful bullish patterns. The blue circle shows the Tweezer Bottom that formed when the central bankers once again saved the stock market from selling off to any great extent. The central bankers are the market. Stocks broke out of the top of the W pattern forecasting big gains ahead. The height of the W pattern is about 250 handles which targets 2350 (2100 + 250) which was easily achieved satisfying the W. You can make the case that the W is about 300 handles tall (from 1800 to 2100) to keep the math simple and that targets 2400 which was achieved.

Note the back kiss of the W pattern breakout line in late 2016 and once price bounced from there there was no looking back. Typically for a W pattern, the breakout is bought, then the back kiss, and then when price overtakes the prior breakout high (three purple dots). If you are a day or short-term trader the W pattern is one of the most important stock patterns you will ever use. W patterns that form  under both the 50 and 200-day MA's on the daily charts are one of the strongest bull pattern set-ups you will ever see and if you prefer to trade on the long side, the W pattern would be the key tool in your arsenal.

The red lines show weak and bleak behavior for the MACD line, histo and stochastics so a lower low in price is likely after a bounce occurs in this weekly time frame.

Watch the 2418-2421 line in the sand to see who wins going forward. A failure of the middle band and 20-week MA at 2421 will likely lead to a sharp drop in stocks and the SPX may seek that lower standard deviation band at 2344 and rising. The path ahead in this weekly time frame is likely choppy sideways with a downward bias.

Watch the stochastics to see if they slip into bear territory under the 50% level. Ditto the RSI going 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.