Tuesday, July 22, 2014

SPX Weekly Chart Rising Wedge Overbot Negative Divergence

As usual, as has been the case for well over one year's time, the bear's are slapped in the teeth again and hit over the head with a 2x4. The market bulls crush the VIX under 12 and create an upside orgy rally today that would make Caligula blush. We have been monitoring the weekly chart for the last month and as you recall we were waiting for a 1 to 3 weeks more and another matching or higher price high, due to the MACD line remaining long and strong in the very near term, and today, voila, it appears. Market bears are happy to see this chart although the money flow may further delay the bears day in the sun by a couple more weeks.

The new price high occurs today and the indicators are lined up with negative divergence across the board both on a multi-month time frame and in the near term. The little red circles may potentially delay the market top for a week or two but the top appears at hand. When Friday prints, check this chart because the MACD line and money flow very short term move (little red circles) will likely be flat or sloping down (neggie d) sealing the fate of the SPX. Regardless, she is very very close now and this is a potential multi-year market top.

The neon green circles show the touches for the 20-week MA occurring at least once every 4 to 6 months at the most so it is time for price to revert to the mean. Price has not touched the 50-week MA since November of 2012, 20 months ago! This is long overdue for a back kiss and price always overshoots to the downside just like the upside. Remember, the collapses from rising wedge patterns can be quite dramatic; sharp and quick where the markets are down -5% before anyone even notices and that is only the beginning. Exercise extreme caution moving forward.

Cash is a nice place to be and do not let people tell you that it is stupid letting money sit in cash. Be patient and let things play out for a few weeks or months forward. Despite the non-stop woodshed beatings the bears receive, they manage a smile on their black and blue swollen face. The bear's bloody eyes display a calm resolute look since they know the chart above will lead them to victory very soon. Projection is for sideways to sideways lower for the weeks and months to come with a multi-year market top potentially printing right now. Index shorts can be continually scaled into here forward. 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.

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