S&P 500: Down or up?
I was going to host another game of DOTA when i saw something on my thinkOrSwim Prophet. I chided myself for not noticing it but tonight, the S&P 500 is on the weekly 200 day moving average.
Melvin told me there were important news coming up. The FED will decide whether to hike or leave rate unchanged tomorrow. The index started off down, and it looks like the chances of it breaking it this week is rather high. But after my game, it ended up!
I was wondering if its another case of FED making their decision on an important juncture. Talk about a little market manipulation.
Anyway i think i mentioned abit on S&P chart here the past few times. My prediction have not all been entirely right, but then again i didnt make predictions, i merely stated important junctures.
This week it is one as well.
Here is a 10 year weekly S&P 500 chart. Notice the red moving average. That is the 200 day one. We are currently hovering around it.
During the previous down move, the FED actually engineer a news release about saving financial institution on the 200 day moving average. Since then, the index have moved up from there and tried to challenge the pink line, which is the 50 day weekly moving average.
It failed pretty badly and now its moving down. A note on the weekly 50 day moving average. If you look at the 2001 - 2002 correction all the highs in the down leg all didn’t breach this pink line, and for the current case it looks to be doing that as well.
What we notice on the MACD front, is that the highs and lows on a long term chart such as this gave us pretty good intermediate signals. It is going to cut down from there. It would seem that we have abit more correction to go or we are going to go into free fall.
However if you look at just after 2003 on the MACD, there is a similar formation but the trend reverses instead of go down. It could very well happen this time as well.
Finally, the 3 moving average lines, that is, 50,100 and 200 day moving averages are converging and the 50 day seems poised to cut them from top to bottom. Extremely bearish from the long term perspective.
There are no MACD and RSI divergence yet, so to me there isn’t a signal. What i would look for is:
- the volume of the trades and how it does this week and
- next on the 200 day moving average.
- Then if it shows signs of reversing, whether there are renewed strength in the RSI.
- The long term moving averages. See if it continues to narrow and moves down.
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