Monday, May 09, 2016

Bearish Market Chart
Commentary & charts highlight the potential for history repeating again .. "Something happened on Friday that has happened only twice in over 20 years on the $SPX: The weekly 100MA (moving average) has crossed over the weekly 50MA. Only by 1 handle mind you, but it has happened. The last two times this happened carnage followed: Both of these crossovers happened in context of the following events:
* SPX had broken a multi-year ascending trend line
* GAAP earnings were declining
Both of these conditions are in place here as well. However, given the consolidation of price over the past year and a half it is also relevant to point out that a similar consolidation occurred in the mid 1990s which resulted in a massive price move toward the upside. The big difference to then: GAAP earnings were rising. They clearly aren’t now. The conclusion to all this: Bulls can’t afford any further price decrease here because it would confirm the MA cross-over and likely set in motion a larger corrective move inviting new lows altogether. This is at least the track record. So this next 2 weeks into OPEX may hold the golden key as to the ultimate directional move of this market. Buckle in."
LINK HERE to the analysis

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