Saturday, February 9, 2013

SPX Daily Chart Overbot Negative Divergence

The SPX daily chart prints a new intraday high for 2013 at 1518.31 and a new closing high for 2013 at 1517.93. The volume is paltry comparable to trading during the Christmas holiday.  Not exactly a ringing endorsement of higher highs. The snow storm was moving into Greater New York so traders wanted to get home before the mayhem, and no one can blame them for that. Keystone would have already been home with his feet up on an ottoman.  Price continues to play around at the upper end of the Bollinger Bands but has not punched substantially through. The move appears to be exhausting and running out of juice. Price has stayed above the middle BB, even after the upper BB violation occurred back in early January, one month ago. The SPX needs to show respect to the middle BB, which is also the 20-day MA, now at 1495.37, it is long overdue.

The purple lines show the negative divergence highlighted last weekend which resulted in the spank down to begin the week. The red lines show the higher high in price once again, five days later, and the indicators remain firmly negatively diverged wanting to see weakness in price.  The brown lines highlight a potential H&S devleoping with head at 1518 and neck line at 1495.  The chart says down but even after price falls, the bulls keep finding a way to bring things higher. Perhaps a move down to test 1495 is destiny for this coming week. 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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