Price is taking on an expansion pattern as price moves forward with a downward bias. The interesting thing about megaphone-styple patterns are the inflection points that can be quite dramatic. If price would reverse now and reenter the megaphone shown by the thick black lines, the lower target is 1300-ish, well over 100 handles lower. The volume off the top is interesting with the bears selling strongly in September, then in early November. The near-term bottom results in strong volume but not as strong as the early November selling. Price has climbed back into the price candle where the large volume occurred at 1395-1430, but all the recent volume moves are well under the pace of selling in early November. If the bulls are serious, they must bring stronger volume to the table. The red lines identify the wide range corresponding to the high volume candles thru 1340 (Draghi's pronouncement of supporting the euro on 7/26/12) and 1435 (post-Draghi announcement of the OMT bond-buying program early September).Early December is where the highest amount of tax-loss selling occurs and this year is a double whammy, selling stocks so losses can be written off against the winners for tax purposes, and, also, now selling the winners since the capital gains, dividends, and other taxes are all going up as a result of the election. In other words, cash in and take the profits at a lower tax rate. Then traders can bring on positions after the first of the year once the fiscal cliff drama is solved and more clarity exists. Both outcomes are more bear-friendly but in these markets, flip a coin. The dividend announcements where companies are pulling the divvy's into 2012 to avoid taxes are resulting in large pops for stock prices. The markets remain subservient to the politicians and central bankers.The 20 and 200-day MA's are starting to flatten out which hints at some extended sideways action. The 50-day MA at 1421.60 is so close price would be amiss to not want to test this important moving average. The stochastics and money flow would like to see a higher high in price, this would be in concert with a test of the 50-day. Then a potential roll over with negative divergence may be in play. Markets are erratic, unstable and not to be trusted. Current projection would be topping in the 1413-1429 range right now then roll over. Watch the 50-day MA closely since it carries a lot of clout. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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