The price chart below shows daily SPX (green line and right scale), daily NYSE Summation Index (NYSI; red line and left scale), and the NYSE Oscillator (NYMO) 50-day MA (blue line). Normally, when both NYSI and the NYMO 50-day MA rise, SPX also rises. Moreover, both NYSI and the NYMO 50-day MA fell to low enough levels recently to create an SPX intermediate-term bottom. Also, above the price chart is the CBOE Put/Call (CPC) 21-day MA and below the price chart is the CPC 50-day MA. Typically, a falling CPC 21-day MA is market bullish. Both the CPC 21 & 50 day MAs reached all-time highs recently, which are bullish, since CPC is a contrarian indicator.
Although these intermediate-term technical indicators are bullish, it doesn’t mean SPX will rise sharply. A volatile trading range may take place instead, until these indicators reach market neutral or bearish levels. At that point, the downtrend may resume. The indicators suggest SPX will not test the June low at 1,219 near term. However, a rise above 1,290 would be bullish to test the 1,326 high. SPX closed at roughly 1,265 Friday. Major resistance levels are 1,290 (downtrend high), and 1,280 (top of recent congestion area). Major support levels are 1,263 (slightly rising 200-day MA), 1,258 (top of prior congestion area), 1,253 (multi-year Fibonacci level), and 1,246 (previous support & resistance).
Chart available at PeakTrader.com Forum Index Market Forecast category.