Monday, November 10, 2014

SPX 1-Hour Chart Overbot Rising Wedge Negative Divergence Tight Bands to Squeeze Out Big Move

With about twenty minutes of trading remaining in the Monday session, the bulls keep running higher today fueled by the weaker yen with the dollar/yen pair moving up from 114.00 to 114.90. VIX is stabbed lower to create additional bull fuel. The SPX prints a new all-time intraday high at 2038.70. The hourly charts continue to set up or are set up negatively. So the technical's are battling the BOJ. The 1-hour chart above is in firm negative divergence across the board (red lines) and along with the rising wedge patterns and overbot conditions, price should receive a slap down at any time. But this is comically like waiting for Godot due to the power of the central bankers.

The technicals should win out. The bulls will probably slide things out sideways in the final minutes since they kept equities elevated all day long, however, looking at the chart above, you would think some bad news is on tap overnight since the chart wants to see a pull back. The blue arrows show the tight standard deviation band squeezes. The two prior squeezes created moves of about 33 points and 25 points, both resolved up. So if a move of 20 to 35 points occurs now from the current print at 2037, presuming a down direction on tap, the lower target would be 2002-2017. The 2024 and 2018 levels are strong support maybe that is the target then price will likely recover again. Overnight may be interesting. The expectation is for a down move and it may be on the order of 20 to 35 handles very fast. Tomorrow will be interesting.

Keybot the Quant remains long and is currently tracking VIX 14.09 and JJC 37.08 as the keys to market direction. Both are under the levels listed so the VIX creates bullishness and the JJC creates bearishness. The two parameters remain in their respective bull and bear camps all day long so a sideways day or sideways with an upward bias is expected which occurs. The bulls receive juice due to the strong move lower with volatility. If you put your boot on the neck of volatility you send stocks higher. 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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