Possible SPX pullback: it tends to pull back after it is 100 points away from the 15MA

The SPX tends to pull back after it is 100 points away from the 15MA

For example: The May 4 Weekly high 956.23 with the 15MA of 855.63 pulled back to 869.

This week so far: the weekly high is 1068.63 with 15MA of 977.76.  This suggests that SPX is close to repeating a pullback similar to May 4, since 1068--1077 is about 100 points from the 15MA. The SPX 1077 also is amazingly close to other key fib numbers. The slide from 1039 to 991 has a projected 63% fib of  1070 and 79% fib exten of 1078.

If SPX gets to 1068 and retraces, then fibs are: 1051 (23%), 1039 (38%), 1021 (61%)
If SPX gets to 1078 and retraces, then fibs are: 1058 (23%), 1045 (38%), 1024 (61%)

Also, the more recent decline from 1048 to 1035 projects these fib extensions as target prices higher:

1057 (61%), 1063 (100%), 1073 (161%).  The "standard" extension for this type of move is 100%, which is why I took a swing short. I was expecting the SPX to cap out at 1063/65 (100%) but it went higher to 1068 thus far, and 1073 is possible too.

It's very intersting that both moves - 1039 to 991 (initial larger) and 1048 to 1035 (smaller secondary)  both project smilar targets.

Note that the uptrend has been strong, and SPX has only been retracing 23%. So, will look to see if 23% holds or breaks lower.

This pullback phenomena is not unusual, it's standard classic tech analysis. The point range is not a fixed number, it could be 5 points or 200, but the idea is the same: when the prices get far away from 15MA they tend to pull back. This makes sense, since the 15MA (or 20 MA) represents support. In fact, prices can make these big declines and STILL be in an uptrend. The trend will change to down if prices close BELOW the 15 MA and sustain down. Reverse is obviously true if the trend were down.


* ChristopherStockGuy is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. For details, see the post from SATURDAY, AUGUST 15, 2009 titled "Disclaimer".