Thursday, November 14, 2013

SPX Daily Chart Overbot Rising Wedge Negative Divergence Tight Standard Deviation Bands to Squeeze Out Big Move

The markets have more lives than a cat. The Yellen dove rally pushes the SPX up 14 points, +0.8%, for a new all-time intraday high and new all-time closing high at 1782.00. Despite the upside orgy, the red lines show firm negative divergence remaining across the indicators. The big up did create some VST juice with the RSI and stochastics (short green lines) but the stochastics are simply back in overbot territory and negatively diverged across all prior time frames. The pink standard deviation lines are interesting. The top band drops downward catching the top corner of the chart which now creates a tight squeeze (pink arrows). A big move is coming in the SPX, up or down. The tight bands do not predict direction, however, price is at the top band now, 1783-ish, which points towards a move back to the middle and lower bands.

The small brown circles show how price bounced twice off the important 20-day MA now at 1759.57. The lower red trend line over the last month is also holding as support and creating the red rising wedge pattern now in play. Price may play around up inside the apex of the wedge for 1 to 3 days. The 3 large volume days over the last 3 months are all off the tops hinting that distribution is taking place. Institutions sluff off stock to Joe Retail as the daily media hype keeps pumping markets higher. One day is stranger than the next in these markets. The whole drama is likely coming to a crescendo now or soon. Put/call ratio's and VIX remain low signaling complacency and fearlessness and a significant market top at hand. The expectation is for a roll over to the downside, perhaps sharply due to the tight band squeeze, however, if Yellen climbs on top of the table today, waving a sparkler in each hand, donning a red, white and blue Uncle Sam top hat, singing her original song Praise Thee QE, the bands are going to squeeze out a vertical move higher. Projection is for lower prices moving forward. 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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