Thursday, April 3, 2014

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

The bulls continue the upside Yellen orgy rally. Price jumps from 1845 to 1891, +2.5%, in four days. The stock market is moving about +0.6% higher per day. The Fed and other central bankers are powerful. The ECB decision is on tap only an hour or so away. The 8 MA is above the 34 MA signaling bullish markets for the hours ahead. Everything is going the bulls way. Bears got nothing without a negative 8/34 cross. The 8 MA is 1889 so the bears need to send price under 1889 to cause the 8 MA to curl downwards.

The upward-sloping channel and rising wedge are both in play. Price is at the top rail of the wedge but there remains space above to the top rail of the channel. The red lines show firm negative divergence across all indicators so the expectation is for a spank down in this 30-minute candlestick time frame. There is lots of momo, however, so price may take the bulk of the day into tomorrow to roll over. If you bring up a 2-hour chart, negative divergence is in place or developing but the MACD line continues higher. Thus, despite the negativity in the 30-minute chart above, the 2-hour chart likely needs from one to four candlesticks to play out to roll price over to the downside which corresponds to two to eight hours of trading time which may take markets through today and into tomorrow morning after the Friday Monthly Jobs Report. The 1-hour chart exhibits negative divergence across all indicators just like the 30-minute above so this hints that markets may top out and roll over today perhaps this afternoon.

Of course all bets are off depending on what Draghi says this morning. Draghi is bringing the tablets down from on high and will announce the fate of global markets at 7:45 AM EST followed by the press conference at 89:30 AM where Draghi's dovishness, or lack thereof, can be assessed and futures will react. Overall, the expectation is for the SPX to top out today or tomorrow. Bulls are in control until a negative 8/34 cross occurs. 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.

Note Added 7:27 AM on 4/4/14: The SPX weakens yesterday due to the negative divergence but markets simply remain in a holding pattern until the Jobs Report due out in one hour. The 8 MA remains above the 34 MA, however, they are sitting directly on top of each other both at 1887. Obviously, markets will pivot and choose direction, which determines the 8/34 MA cross, after the Jobs Report.

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