Sunday, August 31, 2014

SPX Daily Chart Overbot Negative Divergence Developing

The daily chart is negatively diverged across both the longer three-month period and the very short term except for the MACD line and potentially the RSI in the VST. So price will need to pull back right away or say in a day or so, then will want to come back up for another look at current price levels then likely roll over. The intraday all-time record high at 2005.04 printed on Tuesday, 8/26/14, was created with the gravestone doji candlestick. Since then, the next three candlesticks are a doji, doji, and a hanging man for Friday. All four candlesticks indicate a trend change in price on tap but follow-through is needed to the downside for verification.

The RSI is important since if it climbs back up into overbot territory at 70+, the SPX is likely going to top out in the 2020's. The upper standard deviation band is at 2025 and has not yet been touched; this band may trend lower in the days ahead. The 1.24% Fibonacci extension for the move down from late July to early August that retraced 100% is the 2010-2015 level. The upper and lower red trend lines are interesting since they are squeezing price in for an up or down decision on Tuesday or Wednesday (markets are closed on Monday).

If the SPX moves higher in price, it is doubtful the money flow, stochastics and histogram would reverse their bearish slope lower. Markets are very news-driven nowadays in fact the whole rally from the 1905 bottom is on Russia and central banker happy talk. The bottom occurred when Putin said he wanted to seek a peaceful solution in Ukraine. No doubt that Russia had bot a boatload of calls before they goosed the markets with words. Putin gave the rally a second bump at about 1950. Then the Jackson Hole push came with ECB President Draghi hinting at stimulus coming as soon as this Thursday, 9/4/14, and voila, instant rally. Equities continue to be driven higher by the central banker money printing.

The upside resistance is the all-time high at 2005 and the support below is 1990-1991 and then 1985-1986. The 1940-1960 area is the zone where the bulls and bears fought it out intensely with the red doji candlestick displaying equal shadows 11 trading days ago. This zone represents the strong selling volume candlestick and it would be prudent for price to come down into this zone to print a new volume candle and decide if the bulls are stronger to bounce price and head back up to the highs or if the bears are stronger to take price lower. Volume is validity.

The projection is for the SPX to top out at anytime in the days ahead. The upside 2010-2015 and 2020-2030 levels have to be respected. The daily chart will be able to tell a lot more after Tuesday and Wednesday play out especially in respect to the RSI. The SPX weekly chart is negatively diverged across all indicators and would be fully agreeable to price rolling over right now and trending lower for weeks and months 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.