Monday, December 30, 2013

SPX Daily Chart Upper Band Violation Overbot Rising Wedge Negative Divergence Developing Gap

Typically, after a strong month occurs, the last couple days of the month tend to finish weak. So far today, equities are flat to lower although the Dow continues higher. Traders cannot get enough of the blue chips, everyone figuring they are 100% safe and can simply collect the divvy moving forward, protected from any negative market affects. Remember, a drop in price in any of the blue chips of 3 or 5% eliminates any divvy joy. The dividend stock bubble grows and should rupture any time forward. SPX price continues to run up the upper standard deviation band (pink line), violating the upper boundary, so a move back to the middle band, the 20-day MA at 1805.73, and lower band at 1762 are on the table. Price needs to back kiss the 20-day moving forward to simply satisfy expected technical analysis behavior. Note that price breaks out of the sideways 1782-1808 blue channel 6 days ago so price needs to show the 1808-1814 area respect and perform a back test. The 20-day is moving higher which will form a confluence at 1808 providing the 1808-1814 support area with street cred as a likely test needed in the near future.

The MACD line has some near-term juice due to the thin-volume Santa Claus rally. The RSI is flat and not yet overbot. Therefore, a jog move cannot be ruled out which would take price towards the end of this week (markets are closed Wednesday to celebrate the New Year) to set up with firm negative divergence. Projection is for a move lower to the 1818-1823 gap fill and the 1808-1814 support zone then reassess. Any further upside should be relatively limited. Watch to see if the MACD line rolls over as the tail end of the week moves closer. 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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