Monday, July 1, 2013

SPX Monthly Chart Rising Wedge Overbot Negative Divergence

June ends last Friday and the monthly chart finally prints a negative month after seven straight up months.  Markets were agreeable to rolling over in late 2012 but the Fed saved the day again with QE Infinity.  The BOJ chimes in by weakening the yen this spring which creates the new all-time highs in the U.S. indexes as well as calm in Europe since the easy money bot stocks and bonds across the pond. Price is at the upper band limit and spiked up through for the last two months. The rising wedge, overbot conditions and negative divergence all say the top is in. The October 2007 top was verified by the MACD cross (blue circle) so watch this closely over the next month or two. If the MACD cross occurs, the markets are toast.

The pull backs during the 4-1/2 year rally sends price to the middle band, the 20-month MA, and this is currently at 1428 and rising. The Iraq War rally began March 2003 so that bull run into the October 2007 top was 55 months. The cyclical bear is October 2007 to March 2009, 17 months. The current cyclical rally from March 2009 to present is 52 months, long in the tooth. The purple circle shows a candlestick tweezer top over the last two months. The chart may want to play around at these levels for one to four months like the 2007 topping action. The 10-month MA is 1511 and rising and serves as an early warning system that the markets will sell off much more. The 12-month MA at 1491 and rising is one of Keystone's cyclical signals and would signal major market turmoil ahead. The markets would be lost under SPX 1491. Projection is lower prices moving forward for the weeks and months ahead. Watch for the potential MACD cross this summer which would clearly point to lower markets ahead. 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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