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Monday, 2 February 2015

Bearish Close to January

On Wednesday 7th January I wrote a post called 'Suspended Sentence' in which I was talking about some statistics I had compiled showing that since 1970 there had been eight instances where SPX had closed down more than 2% in the first three trading days of the year. Of those eight instances the three that closed above that close on the third day all went on to have decent years, but the five that closed below that level all had difficult years, with the two best being effectively flat (up 3% and 1%)on the year, and the other three down 10%, 11% and 39% (2008) on the year respectively. That close was at 2002.61, and the close on Friday was at 1994.99, so SPX is on the bearish track in 2015 on this stat, and that also fits my expectations for the year.

Friday's close delivered a conviction break below the weekly middle band. that should now be decent resistance at 2017, and the break has opened up targets at the 50 week MA at 1957 and the weekly lower band at 1911. SPX weekly chart:
On the daily chart SPX is still testing strong range support in the 1990 area. A break below opens up targets at the 200 DMA and 1974, and the 50% retracement of the wedge at 1957. The main bull/bear level here is the weekly middle band at 2028 and I'm not expecting to see a conviction break above that for weeks to come on my main scenario here. SPX daily chart:
The technical setup for me here is all bearish unless bulls can break back over the daily middle band. Failing that I'm looking for AM highs that fail as the default morning setup until further notice.

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