SPX S&P 500 Monthly Chart; Bull/Bear Battle Continues at the Critical 12-Month MA at 3962

The stage is set. It is time to separate the men from the boys. The SPX is testing the 12-month MA at 3962 which decides if the US stock market remains in a cyclical bear market going forward, or, if stocks begin a new cyclical bull market.

As 2022 started, the 10-mth MA failed and it served as an early warning system that something is going wrong with the stock market. The 12-mth fails in early 2022 and it was lights out, the party is over.

The cyclical bear market continues but the bulls have a legitimate chance to right the long ship. In November, the bulls attacked the 10-mth MA that is now below the 12-mth since it follows price more closely. The bulls were rejected handily from the 10 and 12-mth MA's in December receiving coal in their stockings.

The bulls again try to create a cyclical bull market and close above the 12-mth MA in January only to give up the ghost again in February. The bull/bear battle at the 12-month MA at 3962 continues. It is the Gettysburg of markets and instead of the blue versus the gray (union (North) versus confederate (South), respectively), it is the bulls versus the bears.

It is all on the line at 3962 and this dictates the path forward for the year. Obviously, this is not your run of the mill back kiss. It is for all the marbles. Bulls win big if they bounce off 3962 support and trend higher. A big rally will follow.

Bears win big if price collapses through 3962. Armageddon for stocks begins if/when the SPX loses the 10-month MA at 3928. The CPC and CPCE put/call ratios remain low and complacent so the bears have the upper hand to create something ugly going forward.

Note that price already came down this month, and last, to tap on the 10-month support and the back tests are successful for the bulls so they are hopeful for the optimistic outcome. If 3962 is lost, there will be another test of 3928 where the bulls will have one last chance to stop the developing carnage. 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 10:26 AM EST: The SPX gaps higher to 4018 and then drops to 3997 now sputtering sideways at 4000. It is likely all noise until the US Monthly Jobs Report drops at 8:30 AM EST only 22 hours away.

Note Added Friday Morning, 3/10/23, at 7:20 AM EST: The US stock market collapses. The SPX plummets -1.9% to 3918 losing the 12-mth MA at 3957-3960 and 10-mth MA at 3921. Back tests are likely needed going forward. More choppy slop is likely with the US Monthly Jobs Report dropping in an hour and inflation data next week. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.