Friday, May 24, 2013

SPX Daily Chart Upward-Sloping Channel Rising Wedge Overbot Negative Divergence

The red lines show the negative divergence and rising wedge that created the spank down. The MACD line is sneaky not clearly indicating negative divergence so it leaves the door open for a price recover move back up to the prior highs. The markets are in desperate need for a reversion back to the 200-day MA at 1484 since it has been one-half year (blue dots). From the 1650 level, a move to 1484 is a -10% drop. In the near-term, the blue channel illustrates the parabolic-style price move since the May bottom. Price reversed at the upper rail of the multi-month brown channel.

A back kiss of the 20-day MA at 1630.34, and rising, is needed. Note that for the wildly bullish start of the year, price went about six weeks without testing the 20-day MA. Currently, the SPX is at about 5 weeks or more since the last touch. Projection is sideways to sideways lower moving forward. Downside targets are 1630 (20 MA), 1615 (bottom channel rail) and 1590 (50 MA). If price can perform a test of the important 20-day MA, that would be a logical place for a recovery move to occur. The 1649-1650 and 1633-1634 support levels are key. The 20-day is moving upwards so the confluence at the 1631-1634 area is developing credibility as a magnet for price. 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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