Thursday, October 23, 2014

SPX 2-Hour Chart Inverted H&S Overbot Rising Wedge Negative Divergence Setting Up

It is difficult to keep up with these fast moving markets with huge day to day and intraday point swings. This is with a VIX at 16; wait until it returns above 20 again. Here is an update of the 2-hour chart. The SPX resistance levels at 1943, 1951, 1958 and 1960-1961 (dark blue lines). The stock market was hinting at higher prices as was described with the long and strong indicators the other day. So what's the story now? It is almost soup, but not quite.

The red rising wedge and overbot stochastics are bearish indications. The red lines show the negative divergence in place for RSI, histogram, stochastics and money flow but money flow may peak higher and the RSI never reached overbot territory as yet. The MACD line is long and strong so it wants another price high after any pull back in this 2-hour candlestick time frame. Thus, if it takes 1 to 3 more candlesticks to form the top creating universal neggie d and the spank down, that is about 2 to 6 hours. So the near-term top should occur today or tomorrow morning.

A new moon occurs this evening and equities are usually weak moving through the new moon each month (about 65% of the time). The top will depend how quickly the MACD line rolls over to create neggie d. The inverted H&S remains in play with head at 1830 and neckline at 1895-ish targeting the strong 1960-1961 resistance level

The bulls receive a market buy signal with the BPSPX as previously highlighted. The bulls send the SPX above the 200 EMA on the 60-minute chart at 1937-1938 signaling bullish markets for the hours and days ahead. The financials remain important. Watch XLF 22.89. Market bulls win big if XLF stays above 22.89Bears win big and stop the market upside if XLF drops under 22.89. The XLF is printing at 22.91 as this is typed.

So watch the XLF 22.89 which would indicate that the near-term market top is in. Ditto the MACD line on the 2-hour. Once it negatively diverges the SPX will roll over to the downside. 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 1:08 PM: The SPX 50-day MA is 1966.82 a sturdy resistance ceiling. The SPX will go back up to 1980 plus if price takes out the 50-day to the upside. The 20-day MA is 1929.37 serving as support. XLF is 22.94 so the bulls keep punching the bears in the face.

Note Added 1:47 PM: The XLF comes down to back kiss the 22.89-22.91 area then launches to 22.98 now pushing the broad indexes higher. The bears are running for their lives. The MACD line continues higher on the 2-hour chart so the bears have to endure some additional pain. If price moves up through 1958 R, then the 1960-1961 is on tap and that would fulfill the inverted H&S pattern. With the XLF moving higher, the market bears got nothing.

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