Saturday, August 30, 2014

SPX Monthly Chart Overbot Rising Wedge Negative Divergence

The monthly charts receive new prints on Friday as the last day of August trading occurs. The SPX is up six of the last seven months and up 10 of the last 12 months. The central bankers can throw one heck of a party with the easy money from the Fed, BOJ and other printing presses flooding into markets pumping equities higher to make the rich, that own stocks, richer. The people in power are simply making themselves wealthier and to H*ll with the rest of the country especially the middle class, now the lower middle class, and poor. No matter how much the Fed and democrat and republican politicians wax faux worry about the lack of jobs and such, they are fully aware of what they are doing and how it is lining their own pockets where they will never have to worry about finances in their personal lives ever again.

Last month, we were continuing to look for upside since the indicators were not completely negatively diverged to identify the multi-year top. The bulls keep finding ways to squeeze out juice (the rich uncle that constantly saves the day is the central bankers) and the MACD line still has a sliver of bull juice available to create additional highs in the SPX after a selloff occurs. The rising maroon wedge is extremely ominous since the collapses from rising wedges can be quite dramatic. The long holders will be whacked as the weeks and months play out. The overbot conditions, rising wedge and negative divergence (sans the MACD in the VST) all indicate a substantial top is forming and nearly in place. If the SPX would not have closed the month at the highs, the MACD line may be negatively diverged right now which would identify the multi-year top but instead the bulls are going to stretch it out for a couple more months due to the long and strong MACD line. The neggie d with RSI, histogram and stochastics, however, will slap the SPX south for an initial spank down in September.

The chart set-up forecasts a lower September, or September-October, then move back to current levels for October-November, which would be the multi-year top where prices will then trend lower for months and perhaps years ahead. October has a reputation as the crash month but there probably needs to be two candlesticks to create the neggie d on the MACD so perhaps late October or early November may be more likely for THE top. Note that for the ADX, the downtrend in 2008-2009 was stronger than the current 5-1/2 year rally uptrend. The market top will be identified by the ADX rolling over to the downside. Volume is weaker and weaker as time moves along. A more selective group of stocks, such as AAPL, are driving the upside on thinner volume which is a bearish signal.

The bulls have a smidge of juice remaining due to the MACD line. The forecast is a pull back over the next month or two, then back up for another look at SPX 2000, where the MACD will roll over and the multi-year top will be in place. It will not be long for the bears; they will finally receive their retribution for the central banker 5-1/2 year rally in the weeks and months ahead. Equities should place the multi-year top, like 2000 and 2007, at any time over the next few weeks or two months as soon as the MACD line rolls over. As markets drop in the weeks and months ahead and the selling exceeds -10% for a correction, the long holders will probably start dumping positions unwilling to relinquish the obscene gains in recent years which will accelerate a down move and likely expose the air pockets underneath. There is likely from 15% to 80% fluff in the stock market due to the central banker intervention that has destroyed price discovery across all asset classesWatch the 10 and 12 MA's very important market levels. The bear's day in the sun will be coming very soon; pay attention to the MACD line rollover. 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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