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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

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NOTABLE POSTS WITH IMPORTANT UPDATES...

Sunday, December 09, 2018

The Major Inflection Point For The SPX

Further to my post of December 2, it's evident from the following daily charts of the four U.S. E-mini Futures Indices that they all broke and closed below both their "chaos zone" (the trio of future-offset 5, 8 & 13 MAs) and their 50 & 200 MAs, respectively, last week...a failure to hold above those major support levels.


Price on the SPX is currently hovering above 2600, as shown on the following monthly chart.

It's clearly a major inflection point for a couple of reasons...namely, it's a major price support level, and it's right along the upper edge (+1 standard deviation level) of a long-term regression channel from the lows of 2009.

As I stated in the above-mentioned post, the SPX is now in danger of dropping to its next major support level around 2400, as more fully illustrated in my post of August 6.

In fact, 2400 is...
  • slightly below a confluence of two external Fibonacci retracement levels around 2473 and 2485
  • just above the lower monthly Bollinger Band at 2372
  • above a convergence of a -1 standard deviation level of the regression channel with a 161.8% external Fib level at 2347, and the 50-monthly moving average at 2332

Extreme weakness on accelerating downside momentum may just see price reach 2400, or lower, before, possibly, stabilizing.


Furthermore, price on the SPX:VIX ratio is well below the Bull/Bear Line-in-the-Sand level and is approaching the 100 level, which represents an extremely volatile zone, as shown on the following monthly ratio chart.

The momentum indicator closed at its lowest historic reading on this timeframe last Friday, confirming that extreme volatility is already present in this ratio.

A drop and hold below the 100 level on the SPX:VIX ratio, together with a drop and hold below 2600 on the SPX could very well see the SPX drop to somewhere around 2400 in short order.