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The 30-Second Technical Flash Chart Report on the S&P 500

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This week is do or die for US stocks.

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US equities opened higher this morning and are setting up for a sharp pullback based on technical analysis that uses trends, cycles, momentum, volume, market breadth and key resistance zones.

Take a look at the charts below for a quick look at what I see happening.

Bar Chart, Market Momentum Index

I look at this chart daily. In short, if its price is at 101 or higher, I expect the broad market to pause or pull back within the next day. It tells me if stocks have moved too far in one direction on a daily basis; if so, sellers (big money players) are likely to re-align stocks by taking profits or shorting during these times.



Stock Trading Above the 50-Day Moving Average

Here we can see that while the S&P 500 (INDEXSP:.INX) has been rising over the past six months, fewer stocks are trading above their 50-day moving averages. This means a smaller group of stocks is holding the market up and it's just a matter of time before those stocks burn out and roll over as well.




SPY Swing Trading Analysis – Daily Chart

With the S&P 500 breaking down from its trend channel and testing a short term resistance trend line, odds favor sellers becoming more active and pulling the market down as they unload any remaining long positions and possibly get short the market. Both of these actions will put pressure on US stocks.





Big Picture Outlook

This chart is just to show you what is possible. I am not a perma-bear, nor do I want another bear market like this to happen. But knowing what is possible is important. Major market tops tend to take several months to happen. If this is the case, then it could be a wild and choppy market for the rest of 2013. Don't expect price to just collapse and free-fall for 18 months. Bear markets must be actively traded as they carry a lot of risk.



Conclusion

This week is do or die for US stocks. We need sellers to step in here and pull stocks down. With the S&P 500 trading at resistance, stocks being overbought on a short term basis, and the holiday week behind us (which typically favors higher prices), it is now time for sellers to become active once again.

Editor's Note: Chris Vermeulen offers more content at his sites, TheGoldAndOilGuy.com and Traders Video Playbook.
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No positions in stocks mentioned.

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