SPX S&P 500 Monthly Chart; Battle for the 20-Month MA

Thwack. Slap. Whack. Slap. The S&P 500 continues fighting at the 20-month MA at 2666 an easy number to remember due to the trip 6's. Price played around here last week. If the bears win and price cannot hold the 20, the SPX will trend lower down to the 50-month MA at 2341 on this monthly basis.

If the bulls win and price overtakes the 20 heading higher, there are two key tests ahead. First, price must overtake the 12-month MA at 2725, this is the "cliff," the most important metric in the stock market that separates a cyclical (weeks and months) bull market from a cyclical bear market. The SPX is below the 12 so the stock market is in a cyclical bear market pattern going forward.

The bulls win big time if they can move price above the 12-month MA at 2725. This guarantees more upside joy ahead and the Wall Street Einstein's that are calling out SPX targets over 3K for this year may not be so nuts after all. The 10-month MA at 2735 would represent the last chance for bears to hold the line if price is rallying.

If the SPX breaks up through the 12, the bulls will be singing and throwing confetti but if price hits the 10, and falls back, another test of the 12 will occur with a bounce or die decision on tap. Of course the bounce off the 12 will then shoot price up through the 10 and on to happy bull times. A failure at the 12 and it would be ovah, as they say in Brooklyn, for the stock market. This battle at the 20-month MA at 2666 sets the tone for the stock market for the days and few weeks ahead. 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 10:37 AM EST: The SPX is at 2666 with a devil on the left shoulder telling it to collapse and an angel on the right shoulder telling it to rally.

Note Added 3:20 PM EST: The SPX is at 2666.

Note Added Saturday, 1/26/19: The SPX finishes the week at 2664.76. The 20-month MA is at 2665.33 so the S&P 500 cannot hold the 20. Bears cheer but it is only a tiny 57-cents victory, for now. The battle continues next week.