Monday, February 24, 2014

SPX Daily Chart Expansion Pattern

The blue H&S pattern disappears since price takes out the prior all-time intraday highs, however, it may be a Quasimodo H&S, said somewhat tongue-in-cheek, with a right shoulder the height of the head so if price moved lower from here and failed at the 1740 neckline, the downside target is 1630. It is remarkable to see price squeezed lower by the tight bands in late January but then for price to recover the move in quick order. It shows the power of the weaker yen courtesy of the BOJ. Price could not close at a new all-time high above 1848.38 today despite printing new intraday highs. There is an expansion pattern in play so the top rail at 1875 is in play. The upper standard deviation band is 1866. The SPX has already recovered from the lower band back to middle band and nearly back to the upper band.

Volume today continues to fall short of the selling volume one month ago. The red lines show negative divergence but the green lines show the near-term juice due to the MACD line and money flow that likely want another high after any pull back. Stochastics are topped out and want to see price simply head lower from here forward. The 1848-1851 remains as strong overhead resistance. A move up through 1851 likely leads to a test of 1859 again, then the 1866 area if the bulls are running. Price may want to oscillate at these elevated levels for a few days, the 1866-1875 area cannot be ruled out, but the expectation is for a topping in price and a roll over to the downside for the days and weeks ahead; sideways to sideways lower. The dollar/yen at 102.50 provides the answer; whichever way it moves so goes the SPX. 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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