Friday, February 14, 2014

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence

The 8 MA is above the 34 MA onthe 30-minute chart signaling bullish markets for the hours ahead, however, the indicators are negatively diverged indicating a topping out of price in progress. Note that the positive 8/34 cross occurred at 1750 and a long play from there leads all the way up to 1830, 80 handles higher, +4.6%, if that signal was followed. The bear killer was on Tuesday. Chair Yellen was testifying before the House Finance Committee but she offered nothing new; same ole stuff as Chairman Bernanke. The key that day was the debt limit ceiling resolution in the House. This created the spike higher and when price took out the critical 1809-1810 resistance (where the 50-day MA resides at 1810.39), another 20 handles of upside results. Markets were all set to move lower on Tuesday as the negative divergence shows, however, the happy debt ceiling resolution created the upside launch instead. The chart has now absorbed this bullish catalyst.

The red lines show the overbot conditions, rising wedge and negative divergence that will create a spank down. Note how the money flow is squeezing out a long and strong vibe over the last 3 or 4 hours so it would like to see another matching or higher price high. Thus, the chart may need 1 to 4 more candlesticks to roll over, about 30 minutes to a couple hours of trading time. Perhaps price will drop in the early going to the lower red trend line, then recover, and that should create the roll over.

Key S/R is 1838-1843 (strong overhead resistance gauntlet that bulls must push through to create the path to 1880 and bears must prevent to send the SPX lower and create a multi-month top moving forward), 1832, 1828, 1824, 1818 and 1808-1810. Price sits between the 1832 R and 1824 S, thus, a move higher may test the 1832 in the early going today but the anticipation is that it will hold for the bears and that a negative cross should occur today. Bears got nothing until they create the negative 8/34 cross that will signal downside sledding ahead. Since the 8 MA is 1827.39, bears must push price under this number to curl the 8 MA downwards to create the negative cross. Thus, if you see price dropping under 1827, the bears are starting to flex their muscles. If price remains above 1827.39, the markets will remain elevated and the bulls would like nothing more than to maintain the positive cross into the weekend. 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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