Friday, May 17, 2013

SPX Daily Chart Upward-Sloping Channel Overbot Negative Divergence

The bulls keep bloating markets higher with the Fed and BOJ easy money.  In the last hour of trading yesterday, 5/16/13, Fed's Williams stated that tapering QE should be considered. This caused a late day swoon but the bulls are already tripping over themselves this morning to buy the subtle dip. The blue upward-sloping channel remains in play with price at the top rail. The red lines show negative divergence firmly in place. The MACD line has flattened with the two price highs over the last two days. The bull rally is almost straight up since mid-April, from 1540 to 1660 in only 19 days, +8%.

Note selling volume easily outpacing the buying volume showing another distribution day where traders are taking advantage of the thrust higher and dumping shares on Aunt Martha who is now becoming involved on the long side due to the daily bullish media hype. Distribution in February only led to a further rally in early March and then distribution in late March and early April led to another thrust higher in late April and early May. The rally is long in the tooth but the power of the Fed and BOJ is strong. Projection is sideways to sideways lower moving forward. The 20-day MA at 1607.92, and rising, needs back tested. A move back towards the lower rail at 1600-1620 is anticipated moving forward with the negative divergence creating the spank down. A price jog across the current 1650-1660 area is not unreasonable for today or the first couple days next week but the chart appears ready to roll over at any time. 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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