Tuesday, December 10, 2013

SPX Daily Chart Potential M Top

The SPX squeezes out a new all-time closing high at 1808.37 but not a new all-time intraday high which remains at 1813.55 from the last day of November. We watched the red rising wedge, overbot conditions and negative divergence forecast the spank down, which occurred. Price had tagged the upper standard deviation band and needed to drop to the middle band, the 20-day MA at 1794, which it did. The lower band at 1771 and rising remains in play. The bands are squeezing in again similar to the squeeze in mid-November shown by the neon blue square. This fractal may be repeated now and that upside thrust took place over 3 days time where price tagged the upper band to signal a top. Price has moved higher for 2 days so the door is open for a move higher today to repeat the November fractal with price tagging the upper band at 1816-1817 creating another top.

If price weakens and drops under 1806, a move to 1800 is likely in quick order and a test of 1798-1799 support where price would bounce, or die. Considering that the 20-day is rising, a support gauntlet is formed at 1795-1799 which would be an important bull-bear decision zone with bulls happy remaining above and bears taking control below. The indicators are bear favorable as price prints matching highs compared to the top 6 days ago. The pink lines show that the negative divergence for the indicators which are not enthusiastic about the upside direction. If price moves higher today, watch the brown lines in the right margin. Bulls would have to send the indicators above these levels to signal further upside market strength; this appears to be a formidable task.

Note the volume in recent days all favoring the sell side. Stock is likely being distributed now to any sucka that is wiling to hold the bag. Remember, the SPX weekly chart is bearish as well. The current price prints should create an M top pattern. Projection is sideways to sideways lower moving forward. Bulls may try to squeeze out a move to the upper band at 1816-1817 but the more likely move is a top to occur any day forward and more substantive downside selling to begin. 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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