Thursday, April 30, 2015

If SPX 2090 breaks...

SPX low today thus far = 2090
SPX 20dSMA = 2097
SPX 50dSMA = 2090
SPX Uptrend line from April 1st currently at ~2090

DJIA low today thus far = 17,894
DJIA 20dSMA = 17,988
DJIA 50dSMA = 17,980
DJIA Uptrend line from April 1st currently at ~17,900

That data alone suggests SPX/INDU has reached its 1st key support area. A rally back to SPX 2100-2107 or even the INDU 20/50dSMAs would not be unusual even if the EDT from October 2014 has completed. What will happen if SPX 2090 breaks? Here is what I see as support....
1. Minor support - low 2080s due to another uptrend line
2. Medium support - 2060s due to price-volume, January pivots and the measured target for the 1-2-3 short term trend change... 2095-(2126-2095)=2064
3. Minor support/resistance - 2040ish where the recent triangle began
4. Minor support - 2020s due to the SPX 200dSMA and some price-volume
5. Major support - 1960-2000 due to Fib 38-50% retracement of 1820, price-volume and lots of 2014-2015 pivots

Basically, assuming SPX breaks the uptrend line at 2090ish, I see brief multi-hour support/resistance to occur at 2080ish, 2060ish, 2040ish and the 2020s, but multi-day support (or a multi-percent bounce) is not likely until SPX 1960-2000. Given my projection for a significant SPX low into mid-May, I suspect we have 10-17 trading days to reach 1820ish. One plausible scenario would be a drop below 2000 and rally back to the 200dSMA by end of next week followed by another large drop into May 15th OPEX +/-. Having said all that, we need SPX to break 2090 for the EDT collapse to build momentum. Good fortune.

No comments:

Post a Comment