Friday, April 4, 2014

SPX 2-Hour Chart Sideways Channel Breakout Potential Tweezer Top

The SPX prints a new all-time high at 1897.28 thus far today so pay attention to this number. The jobs number was unimpressive at 192K, under 200K and missing estimates. However, the Fed will keep supplying the easy money heroin so traders line up to shoot this joy into their veins with a syringe and catapult the stock market higher. It is sick to cheer for lackluster numbers but this is the world the Fed created. Weaker-than-expected data results in a continuation of Fed easy money pumping stocks higher making the rich richer and ironically, the middle class and poor are beaten further lower since they do not have jobs and do not own stock. Chair Yellen expresses faux concern over the jobless but she is part of the crew that has created the problem.

The SPX breaks out of the two-month sideways channel 1840-1880 this week; a huge positive feather for the bull's cap. The bulls are unstoppable with the Fed money. The 2-hour chart is negatively diverged (red lines) so price should weaken as the day progresses and roll over to the downside. The blue circle shows a potential tweezer top that may print. Note that the RSI did not move into overbot territory as yet so the bulls will be pushing for this. The MACD line has rolled over with neggie d. Watch these two parameters moving into lunch time. If the two indicators remain negatively diverged, the price roll over should occur very soon in the hours ahead. If the RSI moves up into overbot territory and the MACD line prints higher negating the neggie d, then a few additional hours would be needed for price to top out which places markets at later this afternoon or Monday morning.

Charts always build in everything known up to the minute, but, as with this morning's job number, charts must react to the new data and typically need a little time to adjust and build the news into the chart. The SPX could have pivoted either way this morning but the bulls win as has been the case for the last year. A back kiss of the top channel line would be anticipated next week at 1880-ish since price will need to show respect and confirm the upside break out. Projection is for the SPX to roll over to the downside in the hours ahead. 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 10:39 AM:  The SPX prints a triple top so far today, three stabs at the HOD at 1897.28 and it holds, so far. VIX collapses to 12.69 so the bulls are in full control., so far.

Note Added 12:02 PM: The neggie d holds as discussed above and spanks price lower without wasting time. A new candlestick is now printing for the 2-hour chart so this candlestick will handle the noon to 2 PM trading time slot. The Tweezer Top mentioned above remains in place so this pattern may lock-in the top for several days forward. Price had to come back down to show respect to and back kiss the top rail of the 1840-1880 channel but it was unexpected to already occur today considering the bullish start to the day. LOD is 1879.33 stabbing back down through the 1880 level. Watch to see if the 50% levels fail for RSI and stochastics for the chart above since that will usher in more negativity. VIX is 13.95 moving higher but still benign. Bears need VIX above 14.50 or they got nothing. Watch RTH now at 59.60. The 59.57-59.60 level ushers in significant weakness. Dollar/yen 103.30.

Note Added 12:11 PM: Things are getting ugly. The SPX collapses and is now back in side the two-month sideways channel 1840-1880. VIX 14.15; bears need another 35 cents. RTH is 59.47 giving up the fight creating market weakness. Whoa. The Nasdaq is collapsing down 98 points, -2.3%. This is big-time. RUT -2.1%. Tech and small caps, the market leaders, are in collapse. SPX is 1877 with a LOD at 1874.93 so watch this number closely. There are gap fills needed at 1872-1873 and 1857-ish. If price stays in the two-month sideways channel 1840-1880 then the upside price breakout has failed. The 8 MA just stabbed down through the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead; watch to see if it holds today.

Note Added 4:57 AM on 4/5/14: The early morning bullishness gave up the ghost in the Friday session with the SPX reversing 34 handles off the new 1897.28 all-time high. The action is similar to Friday, 3/21/14, two weeks ago, where a new all-time high was printed intraday resulting in a collapse; signs of a tired 5-year market rally. The negative divergence on the chart above creates the spank down and surprisingly, price drops back into the sideways channel 1840-1880 so the breakout to the upside during the week was a false breakout so far. The 20-day MA is 1865.79 and price closes at 1865.09 losing this important moving average. Keybot the Quant flips to the bear side at SPX 1875 but markets remain very much in a sideways bull-bear struggle. RTH falling through 59.53 triggered the stronger afternoon market weakness but bears are unable to push VIX above 14.50 so the move lower is not impressive as yet. If bears push VIX above 14.50 on Monday morning, then markets will flush lower. Bulls need RTH above 59.53 which will rally the indexes higher again. Traders are far too complacent as was highlighted with the CPC and CPCE put/call ratio charts in recent days. The end game for the central banker-controlled markets will occur when all confidence is lost in the Fed and other central bankers. As long as confidence in the Fed's easy money policies remains, the indexes will float higher. The jobs number is unimpressive today at 192K. If the economy was healthy the number should be 400K per month and more. The jobs number missed the estimates but stocks rallied since bad news is good news with traders counting on the Fed to provide more sugar candy. However, the candy is stale since the broad indexes gave up the fight today. Perhaps the confidence in the Fed is finally shaken?

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