SPX Daily Chart Overbot Negative Divergence Bull Flag Potential M Top

The Energizer Bunny keeps moving higher fueled by the Fed's easy money. The pink bull flag is near played out. Using both the closing numbers and intraday numbers a target zone of 1700-1710 is in play for the bull flag. Yesterday's high print was near 1699, close enough for government work, but a move up into the low 1700's cannot be ruled out. The thicker blue line shows a potential M top in place now only needing the last leg down to confirm the pattern. The 20 MA moves back up through the 50 MA showing that the bulls have game.

The indicators, however, are much less enthusiastic. The red lines show negative divergence in place over the last two months across all indicators and RSI, stochastics and money flow are at or near overbot levels. There is some remaining momo in the VST time frame (short green lines) so a couple or few more days of playing around at 1690-1710 is not unreasonable, but the negative divergence should confirm in the VST and create a spank down like May in the days ahead. Projection is sideways to sideways lower for the days and weeks forward. The FOMC meeting is next week so of course if Chairman Bernanke promises more easy money he will continue to stick-save equities. The self-imposed sole mandate of the Fed is to keep the stock market elevated and hope that time will allow the economy to improve.  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.