Wednesday, October 30, 2013

SPX Weekly Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Price Extended

The Energizer Bunny keeps moving up through the upward-sloping blue channel. The indicators are negatively diverged across the board in the multi-month time frame but the shorter term green lines show the bull juice added as short sellers throw in the towel and give up on the short side due to the power of the near-term rally. The thought of Fed QE continuing well into 2014 is a strong elixir for bulls. Price is extended above the moving averages requiring a reversion to the mean (lower prices) just like the prior tops. The red rising wedge is a bearish pattern with price sitting at the top rail. There is space above to the top channel line at 1790-1800 so if the Fed pops champagne corks this afternoon with happy QE news, the bulls will push towards the top channel rail.

The stochastics are up against the ceiling, there is no further upside available, which hints at the need for the SPX to pull back. The near-term rally has added momentum which may need 1 to 3 weeks to burn off. Projection is for price to top out here at 1772+ over the coming days and week or 3, moving sideways to absorb the recent upside energy, then move lower to the 20-week MA at 1683 and rising, as time moves along. 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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