Wednesday, October 30, 2013

SPX Daily Chart Channel-Break-Out Rising Wedge Overbot Price Extended

The daily chart has become a mixed bag of signals as the bears throw in the towel giving up on the short side. The short-covering fuel pushes price above the black channel for a break-out. Price is greatly extended above the 20 MA above the 50 MA above the 200 MA so a reversion to the mean (lower prices) is needed just like the May and early August tops. Stochastics are pushed into the ceiling in overbot territory with no further to go which hints that a pull back is needed now. The rally thrust over the last few days creates momentum and the RSI, MACD line and money flow all follow along with near-term long and strong profiles wanting to see additional price highs after a pull back occurs. The power of the Fed's QE is unmistakable; it is the main driver of the stock market upside. Traders do not expect any mention of tapering QE today by the Fed and the S&P futures are already running +5 to keep the bull rally alive.

Projection is for price to top out and drop but return higher for another high, then roll over for more extended downside, so markets may need a few days or week or two to peak out sideways and roll over to the downside. The top channel line is at 1750-ish and the 20-day MA is 1717.29 and rising. Both serve as downside targets. Note the gap in the 1730's along with the September top at 1730-ish. The 20-day MA is rising which will enter this zone as well forming a confluence marking the 1730-1740 area as an attractive downside target--if the bulls are finally willing to give up the ball. 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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