Wednesday, August 3, 2011

Market Watch:SPX

Yesterday we noticed that the SPX was at a decision point at it's 200 day moving average. Well it broke downward. As you can see on the daily chart the SPX rests well below it's 200 dma and it bodes ill for the bulls. In fact it fell so hard yesterday before they stopped it, that it may have actually found some temporary support at 1250.00.

Go back on the chart to the low point in March at 1250.00. you can see the sharp V turnaround right at 1250. Notice also the change in color of the candles with a big red selling day followed by a big up day, just what you want from a turnaround. Then look at the double bottom formed at the 200 dma at the 1260 zone. So, then here we are again after yesterday's 32 point tumble right to 1254.05. The momentum indicators are pegged, but pay no attention to them for now. The stochastic and MACD can stay berried during the downtrend and even after.

Will 1250 be support? I don't know, but we must act as though it is until it is not. Today I would not be surprised to see a bit of a recovery, maybe toward 1280. But if SPX goes under 1250 here, it may sink like a stone all the way down to 1175 where it had a double bottom in November of last year.

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