Monday, November 18, 2013

SPX Monthly Chart Rising Wedges Overbot Negative Divergence Upper Band Violations Price Extended a la the 2007 Market Top

November begins at 1756.54. Current print is near the round number 18 hundo over 40 handles above the start of the month. There are 8-1/2 trading days remaining in the month. The Thanksgiving holiday typically creates bullishness from mid-week on next week and Friday, 11/29/13 (the shortened session after Thanksgiving) is the most bullish day for the stock market of the entire year. Thus, if the bears make a run it will have to be this week perhaps into early next week. Watch the 1756.54 as the month draws to a close over the next couple weeks.

The beat goes on with the monthly chart; a phenomenal blue rising wedge that encompasses the entire 4-1/2 year plus QE composite rally. The red lines show negative divergence across the indicators in relation to the 2007 top sans the MACD line which continues to want to squeeze out matching or higher price highs. RSI and stochastics are overbot and there is a red rising wedge also in play over the last few months. The near term juice with RSI and MACD line (short green lines) will try to create a jog move over the next 2 months (down-up) which should result in universal negative divergence and finally the smack down that is long over due for the last several months. The bears may have to be patient for a couple more months. If November finishes lower and posts a negative month, December may recover, but that should create the neggie d for RSI and MACD line.

Price is running up the upper standard deviation band which now requires a move to the middle band, at a minimum, which is the 20-month MA currently at 1526. The lower band is 1250. The pink dots show the current price extension which has no further to go to the upside (although the bulls keep squeezing out juice). The only other time that price is this extended over the last couple decades is the October 2007 top. The bulls have more lives than a cat. Projection is either down from here on out, or the jog move, where weakness enters the market but the RSI and MACD will allow a price recovery, say in December, and then the roll over to the downside occurs. The drops out of rising wedge patterns can be quite dramatic. 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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