Saturday, May 18, 2013

SPX Daily Chart Upard-Sloping Channel Moving Average Ribbon at Maximum Bullishness Overbot Rising Wedge Negative Divergence

The SPX continues to play around in overbot territory receiving daily central banker fuel. On Friday, 5/17/13, the BOJ pumped the equity markets higher in the morning (dollar/yen now above 103+) and the Fed pumped the markets higher in the afternoon (Kocherlakota calling for continued QE). Note the moving average ribbon fully extended to maximum bullishness (price above the 10-day MA, above the 20, above the 50 above the 100 above the 150 above the 200). If this was a mountain it would represent the tippy-top. The red dots show the elevated price above the 200-day MA which desperately needs a correction but the central bankers will not permit any downside. The SPX is 13% above the 200-day MA and no one expects a reversion to the mean to occur, but, they always do.

The overbot conditions, rising wedge and negative divergence (red lines) all say lower. The MACD line continues to squeeze out upside juice which may create a couple day jog move before a pull back. The lower rail of the channel is the strong 1626-1627 support which serves as a downside target. One day is more interesting than the next. Projection is sideways to sideways down moving forward. 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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