Market Completes False Upside Breakout

SPX (cash) opened weak, pulling the 2 day cycle to the sell side with a projection of 1308 in the initial moments which has been reached and slightly broken. As I completed this update, the projection looked to be around 1304.50. A 5 day cycle buy signal late yesterday has whipsawed from a weak position, which could lead to some serious selling for a couple of days. Support is suggested at an 8 day cycle inner channel line at 1307 and a 5 day cycle inner channel line at 1305.50. They would become resistance if broken.

1309 is the point at which SPX hits a rising trendline from the December peak that was broken to the upside on January 18. Dropping and holding below that would complete a false breakout, which would normally have bearish implications.

Resistance is indicated at the 5 day cycle centerline at 1314.50.

Here’s the cash SPX chart (time stamp in lower right corner).

SPX Cash - click to enlarge

The SP futures (or ES electronic mini S&P) have been mostly in decline since yesterday morning. Support is indicated at 2 day and 5 day cycle inner channel lines at 1297 and 1295.50. Resistance is indicated at the converged cycle centerlines at 1307.50. All 2 and 5 day cycle indicators are on the sell side, with one having a positive divergence.

Here’s a look at the Spoos 30 minute bar chart (time stamp in upper right corner).

S&P Futures Intraday Chart- Click to enlarge

Blue lines more or less represent the nominal 5 day cycle. Red lines more or less represent the nominal 2 day cycle. The first oscillator more or less represents the 5 day cycles. The 3 lower oscillators more or less represent the 2 day cycle. Cycles vary in length and are not the sole component of price action. Outside influences and random noise may have a significant impact at any time, often unpredictable. These charts and their interpretation are meant for educational, informational, and entertainment purposes only and are subject to the Wall Street Examiner terms of use.

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  2 comments for “Market Completes False Upside Breakout

  1. January 24, 2012 at 10:39 am

    Back above 1310 accomplishes nothing for bear case.

  2. January 24, 2012 at 1:22 pm

    Heading back to sub 1310, possible test of AM low. I expect it to hold. We’ll see.

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