The first chart is an SPX daily chart that shows the rising 10-day MA generally held recently. If the 10-day MA continues to hold, then SPX should continue to bounce off that MA and rise higher. However, there are many resistance levels between 1,305 and 1,316, and the 10-day MA is rising quickly. Also, the chart shows, the NYSE Oscillator (NYMO) 50-day MA peaked above 25 in early Jan and closed slightly below zero Fri. Typically, when the NYMO 50-day MA rises above 25, it falls below negative 25, and the second half of the downtrend is steeper. So, SPX may at least pullback somewhat similar to the Jan-Feb and Feb-Mar pullbacks. The 20 & 50 day MAs may be short-term support. The second chart is a six-year daily chart of SPX with its 200-day MA (black and blue lines), the VIX 200-day MA (green line), and the CBOE Put/Call 200-day MA (red line). VIX closed just above 11 Fri and bounced off 10 twice recently. The VIX 200-day MA closed at 12.33, which is slightly above the 12.29 all-time low set in mid-Feb '94, when a 9.7% SPX correction was underway. The VIX 200-day MA has been falling at a decreasing rate recently (Nasdaq's VXN 200-day MA has flattened). When the VIX 200-day MA begins an uptrend, that may indicate the cyclical bull market is over. The third chart is a six-year daily chart that shows the 10 and 200 day MAs ratios of SPX to CBOE Put/Call (or CPC). The SPX to CPC 10 and 200 day MAs have been rising, because SPX has been rising, while CPC has been falling. If the 10-day MA ratio mean reverts, then either SPX will fall, CPC will rise, or some combination therein will take place to where the 10-day MA falls towards the 200-day MA. The fourth chart is a two-year daily SPX to VIX ratio chart with 50 and 200-day MAs. The ratio rose sharply from mid-Oct to early-Jan, when SPX rallied and VIX fell, and it's currently near the top of the uptrend range again above 116. The ratio tends to mean revert. So, it may fall well below 100 within a month. The four charts suggest a larger pullback or correction will take place soon. When SPX falls three or four points below its 10-day MA, selling may accelerate. Also, SPX is just below several major resistance levels between 1,305 and 1,316, including the three day trading area resistance zone between 1,305 and 1,310, the weekly and monthly upper Bollinger Bands around 1,310, and the five-year high at 1,316. Moreover, the market bullish CBOE Put/Call 200-day MA has been more than offsetting the market bearish NYMO 50-day MA and market bearish VIX 200-day MA. Furthermore, a mean reversion of the SPX to CPC ratio indicates a pullback, and the SPX to VIX ratio indicates SPX will be lower in a month. However, if SPX continues to generally hold its 10-day MA, it may bounce off that MA often and rise higher. |
