Saturday, November 26, 2011

Intermediate Term Top and Bull Market High Confirmed in SPX?

Click on Charts to Enlarge

The weekly stochastic indicator (14,3,3) made a bearish cross this week after a sharp rally in the index up to the 200 day SMA.  This is very similar to what occurred in 2008 into the May 2008 high.  Check out the two pink arrows on the chart.  This is a technical analysis signal that confirms this rally is likely complete.

The lower of the two charts above shows with vertical lines where the SPX was in the past when the monthly 14,3,3 stochastics crossed from above 50 to below 50 (both the %K and %D).  Both confirmed bull market tops were completed.

On a multiple time frame momentum perspective here is where we are:

-monthly neutral and trending down
-weekly overbought and just turning down
-daily oversold

So the market is probably due for a brief rally soon, but the larger momentum currents appear to be down.  

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