Monday, June 9, 2014

SPX 2-Hour Chart Upward-Sloping Channels Negative Divergence Developing

The 2-hour chart has been setting up with negative divergence but the bulls receive two bumps late last week, one after the ECB decision, which was actually the Tepper-created rally, and two, the jobs Report on Friday. Prices keep teasing the trend lines of the upward-sloping channels. The indicators are all negatively diverged except for the MACD line that remains long and strong. Futures point to a lower opening which is created by the neggie d but the dip-buyers will enter since the MACD wants to see another matching or higher high in price. That should occur in a 1 to 4 hour time frame and create a top. The MACD should then be negatively diverged and then a more substantive spank down would occur as all indicators would be in agreement with neggie d.

Price has violated the upper band after receiving the squeeze higher (pink arrows) so a move back to the center band at 1931 and rising is on tap. Key support is 1942, 1938 and 1929. The strong upside rally left several gaps behind that will need filled as time moves along. 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 9:36 AM: The dip lasted a nano second and the SPX is already printing above 1951 with new all-time highs. HOD and all-time high is 1951.15. The RSI receives a smidge more juice and is long and strong again so 1 to 3 candlesticks are going to be needed to turn the RSI and MACD line negative; 2 to 6 hours trading time which takes the day well into the late afternoon. Thus, a market top should be placed today but it may take the bulk of the day to get there.

Note Added 9:40 AM: The 1-hour and 30-minute charts are firmly negatively diverged wanting to see some market selling now so the SPX may dip a few handles lower perhaps to test the gap and 1942 support into lunch time, then come back up to get the 2-hour chart indicators in line as discussed above, and then create a market top with the 2-hour charts firmly negatively diverged across all indicators.

Note Added 8:31 AM on 6/11/14: The SPX experiences a slight pull back on Tuesday due to the negative divergence with the histogram and money flow, however, the RSI and MACD line probably want to see one more price high so they can firmly commit with neggie d. The S&P futures are very weak at -9 as the opening bell approaches but price should recover to the highs one more time before then setting up universally with firm neggie d which will begin a more sustainable downside path for price.

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