US stocks are in a cyclical bear market currently and receiving one of the rip your face off rallies that occur within bear markets. The SPX monthly chart has been in focus for the last month as the US stock market decides to live or die. The 10-mth MA at 4456 is an early warning system of doom ahead. The 12-mth MA at 4393-4394 is the demarcation line between a cyclical bear and cyclical bull market, also called the cliff-edge by Keystone.
The 12-mth MA resistance at 4391-4394 is in play over the coming days and the ramifications are huge. If SPX comes up to test 4391-4394 and punches up through, there are rainbows and blue skies ahead. Price then needs to move above 4456 where it is guaranteed nothing but upside ahead. If the SPX sputters at 4456, however, look out, the bulls are not as strong as you think.
If the SPX comes up and tests 4391-4394 and receives a spankdown from this cliff resistance, it can be catastrophic for the stock market. A bloody crash of some magnitude would be expected since the back kiss was successful (price wants to remain below the 12-mth MA and drop like a rock).
Where is the SPX at now, at 2 PM EST? SPX 4369. The HOD is 4383.85 so that is a key number. Price was only 7 to 10 bucks from testing the key 12-mth MA at 4393-4394 where the stock market decides to live, or die. There is still a couple hours remaining in trading. Bears win the game ahead if the SPX stays below 4393. Bulls win the game ahead if the SPX moves above 4393. 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 5:06 PMEST: The SPX ends at the highs at 4385. The die is cast. The table is set. Add your own cliché's. You know what to watch next week. The S&P 500 begins at 4385 so the bulls need about 10 points for victory while the bears will be holding the 4391-4394 resistance with all their might. The story will be written next week.
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