Thursday, May 22, 2014

SPX Daily Chart Sideways Channel Rising Wedge Tight Standard Deviation Bands

The standard deviation bands are squeezing in tight for a big move probably of 20 or 30 handles or more one way or the other. A few days ago the two big down days made it look like the bears were in clover. Then Friday and Monday the bulls send price higher so the big move appears to the upside. But the bears create the down day on Tuesday to take the baton and surely price is ready to run lower. But the bulls bounce strongly yesterday overcoming Tuesday's down day to point to a breakout above. Obviously, price cannot yet decide. Any day price will commit and the SPX either goes to the 1920's or down to the 1840's. January's squeeze was straight forward and lower. The squeeze in December was tricky with a fake out move lower then the break out was actually higher closing the year at all-time highs.

The red rising wedges are in play as well as the thin neon blue line rising wedge where price is testing the upper rail right now. The brown lines show the ongoing sideways channel through 1815-1891 for almost four months, only about a 75-handle range for one-third of the year. Price is at the top of this sideways brown channel so it must either explode higher or receive a spank down from the 1891 or 1897 resistance levels. The indicators are lining out sideways not providing a firm path ahead. The red lines show negative divergence that created the recent tops. Money flow is leaking lower giving the bears a small edge. Price is above the 20-day MA at 1880.03 and 50-day MA at 1868.34 giving the bulls an edge. The 20-day MA is very important and bears need to see price venture lower to here today.

The ADX shows the January selling locked in a downward trend (ADX above 25) but the bulls reversed that negativity in February. Note how the ADX is down at 8.73 absolutely trend-less. The move up in the SPX is not a strong trend by any means. If a strong trend higher, the ADX should be in the 20's or 30's right now. The low ADX confirms the four-month sideways channel behavior for price, staggering along without a firm commitment higher, or lower. This is about to change with the tight band squeeze.

The two buying volume days this week are the second and third lowest volume days of the entire year, not exactly a ringing endorsement for bulls. The low volume likely represents Aunt Edna and Uncle George placing their entire life savings in the stock market just in time to hold the bag. Bulls will celebrate if XLF remains above 21.83 and the SPX starts taking out resistance at 1891, then 1897, then 1900, then 1902 and higher. Bears need to see price drop under the 20-day MA at 1880.03, and rising, or they got nothingThis 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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