Tuesday, May 27, 2014

SPX 2-Hour Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Developing

This is where the 2-hour left off at on Friday with negative divergence on the stochastics, histogram and money flow, but the RSI and MACD line remain long and strong in the VST wanting to see another price high before they set up with neggie d to confirm a top and pending smack down. The red rising wedge apex ends at the top rail of the upward-sloping channel in the 1903-1907 area. The thin blue upper trend line is in the 1909-1913 area.

The 1897 resistance was a target as a potential near term top but the pre-holiday light-volume bullishness drives the stock market higher. Trading should remain thin today as traders nurse hangovers from the Memorial Day festivities. The all-time high for the SPX is 1902.17 from 5/13/14 and the bulls are on target to take this out at the opening bell with S&P futures +6. Price has already violated the upper standard deviation band six days ago so a move back to the middle band, the 20 MA at 1887 and rising, is on the table. There are only four trading days remaining in the month of May which began at 1883.95 so there may be drama at this level this week.

The SPX is at all-time highs in uncharted territory. SPX S/R is 1902, 1901, 1897, 1891, 1889 and 1884. Price is set to print new highs with the rising RSI and MACD line but the histogram, overbot stochastics and money flow will create negativity. Then price will rise again where the RSI and MACD line would be expected to indicate neggie d which would open the door to a downside move. Thus, if it takes one to three candlesticks more to set up the universal neggie d for a move lower, that is two to six hours of trading time, so a projection would be that the SPX may top in today's trading. With thin volume this may be a reasonable expectation. The new moon occurs tomorrow and stocks are typically bearish about two-thirds of the time moving through a new moon.

At this juncture, the expectation is that the SPX should visit the 1884 support this week. The SPX will roll over as soon as the RSI and MACD line create negative divergenceThis 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 5:10 PM: The bulls create a new all-time record intraday high at 1912.28 and new all-time closing high at 1911.91 (a palindrome; 191191). Looking at the indicators on the 2-hour, the thrust higher early in the day created additional momo. Same-o story is in place after the upside orgy today; RSI and MACD line remain long and strong wanting another higher high (but the RSI is now overbot). The histogram, stochastics and money flow are all negatively diverged wanting lower prices now. Thus, another jog move is likely needed on the 2-hour chart; down, up, down, since the RSI and MACD line must negatively diverge to create the pending spank down. The 1-hour chart is more agreeable to bears with the MACD line only slightly long and strong and all other indicators neggie d. The 30-minute chart is negatively diverged across all indicators. Thus, early tomorrow should see some selling but the SPX will likely come up one more time to satisfy the RSI and MACD line on the 2-hour chart. One to three candlesticks, to create the jog move for price and neggie d for the RSI and MACD line may take from 2 to 6 hours, so the bulk of tomorrow's trade. If Keystone had to make a guess, equities should top out in the morning perhaps before or during lunch time and then selling will reenter markets. The retail sector must weaken with RTH dropping under 58.58, otherwise, the market bears got nothing. If RTH moves above 58.58, the bulls are going to have one big party as the SPX runs to the 1920's. RTH sits at the 58.58 pivot to begin the Wednesday session.

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