SPX S&P 500 Monthly Chart; 6, 10 and 12-Month MA's

While everyone was focused on the 200-day at 2539, the real test that was occurring was for the 12-month MA at 2532. The SPX LOD was 2532 on Friday and price bounced. The algo buy programs kicked in since the 12-month was defended. The SPX 12-month MA cross is a major stock market signal; Keystone calls it "the cliff." A sustained failure of the 12-mth MA is the official stake through the stock market's heart that guarantees bear market weakness ahead for many months and perhaps a year or two. The test was key. And price may come down to test again.

The 6-month MA is important from a general market-trend basis. You want to watch it since price falling through the 6-month MA is negativity that must be appreciated and respected going forward for the months ahead. The SPX price is under the 6-mth MA at 2643 which is extremely problematic for the stock market. You may see drama around this level in the week ahead.

The 10-month MA at 2564 is very important and followed by Wall Street old-timer's. The 10 and 12-mth MA's are also programmed into many algorithms. The Keybot the Quant algorithm has the SPX 12-month MA programmed into its model. Friday's price action obviously proves how important these support levels are. The 10-mth MA is an initial warning that the stock market has cracked and in serious trouble. Watch for potential drama around 2564 this week and the bounce or die decision that may occur there will immediately tell you the fate of the stock market going forward.

The bulls have lots of homework to do to right the stock market ship. For starters, the bulls need to boost the price above that 6 MA at 2643. That would be a sign of upside strength. The bears need to push price lower under 2564 which will create further market carnage. If 2532 fails, it is over for the stock market. 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.