Wednesday, October 30, 2013

SPX Monthly Chart Overbot Rising Wedge Negative Divergence Price Extended

The bulls keep running higher and momentum begets momentum. Shorts are throwing in the towel adding the bull fuel. Price is far extended above the moving average ribbon requiring a reversion to the mean (lower prices). The overbot conditions with RSI and stochastics continue. The 4-1/2 year rally is within the top 5 longest rallies in market history. Extra oomph in the RSI 3 months ago leads to another monthly high print with October set to lock in another up month. Indicators are now negatively diverged across the shorter few-month time frame as well as the longer peak-to-peak time frame from October 2007 except for the MACD line that wants to keep squeezing out price highs.

The red rising wedge is bearish but price is also moving up through the bullish blue channel. Projection is a move lower on the monthly basis, November should be weak, but price will want to come back up for another matching or higher high to satisfy the bullish MACD line, perhaps as the year ends, which should lock in a multi-year top. 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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