Thursday, October 17, 2013

SPX 2-Hour Chart Negative Divergence Continuing to Set Up

The 2-hour chart has been in play the last couple days. A pull back was expected yesterday intraday, which occurred, but the MACD line remains long and strong, and now the RSI has a tiny smidge more of upside strength in place. The RSI remains below overbot territory which also allows for more upside in price. The histogram, stochastics and money flow are in agreement that price should simply head lower from here due to negative divergence. The blue dots show price extended above the moving averages which sets up a potential mean reversion again like mid-September.

S&P futures are -4 at this writing so the SPX may drop to 1718, even 1715, after the opening bell, but should recover higher to the 1722 again. At that time watch to see if the MACD line and RSI are set up with negative divergence to finally indicate the top. Thus, 2 or 3 candlesticks more are likely needed for price to peak which would be 4 to 6 hours of trading. This fits inside today's 6.5-hour typical daily session. So perhaps the debt crisis is averted but the relief rally may have already occurred since everyone knew the weak-kneed politicians would kick the can, solving nothing and simply extending time deadlines, which occurred. 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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