SPX500 bearish indicators on weekly chart

FX:SPX500   S&P 500 Index
While there has been some bullish sentiment regarding the 50ma crossing up above the 100ma on the daily chart this past week, on the weekly chart we see the 50 crossing setting up to cross downward over the 100.

The last time this happened was 6/23/08.

The saving grace of this chart is that it seems the price has moved up above the bearish channel it was previously in (in yellow on the chart), but not by enough to make me think it will stay there. There are some other things to consider.

Volume is diminishing (red arrow), while price is advancing upward at a rate that is unreasonable to expect to last for very long. This is an indication that buyers and sellers are diminishing (trade volume ). This could be an indication that there are those waiting to sell because they are hesitant to pull the trigger until they can claim the highest profit possible, so the price action moves upward still with a smaller number of bullish investors buying despite the warning signs. Without volume to confirm the price action this is considered weak market movement, whatever the reason actually is. Investors willing to buy are trailing off despite vastly outnumbering the sellers. I believe a sell-off is inevitable. Such a spike in price begs for people to take profit at some point. No economy, especially not one that seems to have so many economists and the IMF preparing for the worst, can sustain that level of growth.

There is bearish divergence in the MACD . For those unfamiliar with the MACD indicator, it indicates bullish (convergence) and bearish (divergence) price movement. On the MACD indicator you can see the divergence setting in.

As far as what this might mean, there are three scenarios I see as probable. The pink arrow pointing downward is likely. A pullback will happen and there are three different levels I see as likely it to be stopped.

First is the the red dotted line. This is a continuance of the most optimistic trend of Obama's economy. It can be followed back along confirmation points to the lowest point of our current president's run in early March 2009. Not many people talk about this trendline as a major point of support, but there are plenty of confirmation points to allow one to regard it as such. The black arrow points to an approximate point for the pullback to end (if it does).

I placed the pink arrow indicating a more severe approximate pullback point. This blue trendline started back at that same beginning in 2009, but it only has a few confirmation points. It’s not a line that indicates a huge level of support. It would be far better if price action reversed before getting anywhere near this trendline .

The last line of support is the orange line below the blue one. There is only one other confirmation point along this line dating back to 2009 along this trendline . That is to say that this is the weakest line of support of the three.

Taking into account the fact that the price war over oil             rages on, China's growth is slowing, new home sales in the US are at a 12 month low, and the IMF is forecasting a dramatic slow-down in the growth of the world economy, the situation is precarious to say the very least. The current S+P rally started on oil             production freeze rumors, but persists despite oil             production fact. There are fundamental and technical reasons to fear this market.
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