Wednesday, October 30, 2013

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence

The Fed is the all-powerful Oz.  The stock market moves higher purely off the happy QE news these days. Traders believe that QE tapering will not begin until after March 2014 and QE will not end for months after that, then raising rates would not occur until months after that.  The easy money fuels asset bubbles such as the dividend stock bubble now ready to pop. In addition, companies are encouraged to pursue accounting tricks this year such as stock buy-backs to pump stock prices higher. These scenarios goose markets for the short term, weeks and months, but set up disaster in the monthly and yearly time frames forward.

The SPX hourly and minute charts continue to show negative divergence. Each spank down caused by the neggie d results in dip-buyers rushing in, tripping over themselves to buy the long side. With the Fed on tap today, the short-sellers threw in the towel yesterday not willing to be short ahead of the Fed decision at 2 PM EST today. This adds the bull fuel to keep pumping prices higher. The rising wedge, overbot conditions and negative divergence all say a spank down is on tap but the Fed's happy QE Infinity talk manipulates the traders to buy long instead. The 8 MA is above the 34 MA signaling bullish markets for the hours ahead. Bears got nothing unless they receive a negative 8/34 cross. The SPX would have to drop under the 8 MA at 1770 to curl it downwards for a potential negative 8/34 cross. Projection is for lower prices despite the bullishness. The S&P futures are +5 indicating a move towards 1780 this morning. 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.

Note Added 6:24 AM on 10/31/13:  The 8 MA stabs down through the 34 MA at 2 PM EST yesterday just before the Fed announcement signaling bearish markets for the hours ahead.

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