Monday, November 17, 2014

SPX 2-Hour Chart Tight Standard Deviation Bands to Squeeze Out Big Move

The drama with the tight standard deviation band squeeze on the 2-hour chart continues. This is epic the way the bands are squeezed in due to the flat price action over the last week. The red rising wedge and negative divergence created a couple spank downs (red arrows) as they were described just before they occurred a few days ago but surprisingly the bears could not develop any downside juice. The central bankers always show up to save day promising more QE so stocks remain elevated.

The negative cross remains for the MACD lines favoring bears. The indicators are staggering sideways and do not shed light on the direction that price is going to break. Starting tomorrow, the SPX is going to move very sharply either 20 or 30 handles up, or the same amount down. The VIX is at 13.99. If the VIX drops below the 200-day MA at 13.95 the bulls win. If the VIX stays above the 200-day MA at 13.95 the bears win. The limits on the bands above are 2034 and 2043, thus, bulls win big above 2043 and bears win big under 2034.

The SPX key resistance is 2046; the all-time intraday high is 2046.18. Support below is the all-time closing high at 2041.32 (where price begins on Tuesday), 2038-2040, 2035, 2032, 2030, 2024, 2016-2019 (November began at 2018) and 2011. During OpEx week, a Tuesday low typically leads to a Wednesday high. Markets are in a Bradley turn window where a market inflection point is at hand to occur any day now into next week and equities will commit to a direction. The new moon is Saturday and markets are typically weak moving through the new moon which would be Friday to Monday.

The 8 MA is above the 34 MA on the SPX 30-minute charts signaling bullish markets ahead so watch this signal. Bears got nothing unless they create a negative 8/34 cross on the SPX 30-minute chart. Keybot the Quant remains long but if the VIX moves above 14.37 and the SPX drops under 2035, Keybot will likely flip to the short side. So there is lots of drama on tap for Tuesday and a lot on the line. The algorithm is also tracking JJC 36.97 which would give the bulls upside juice and confirm a strong move higher (so watch copper trading overnight) for stocks.

Listen for any geopolitical events overnight. With the bands so tight, something wild may occur over the coming hours into and through Tuesday morning. A huge move is about to occur tomorrow. Fasten your seat belts. Use the above tools to see who wins. One side is going to be very happy this time tomorrow night and the other side very sad. The tube of toothpaste is squeezed tight and is about to explode in one direction or the other. US futures are dead flat on Monday evening. An eerie calm is in place as both sides realize the stakes are high when the sun rises tomorrow. 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 8:00 PM on Tuesday evening, 11/18/14: The VIX lost the 200-day MA at 13.94 at the opening bell this morning so the fix was in for the bulls that rode to victory catapulting up and out of the tight bands gaining over 15 points to a new all-time intraday high at 2056.08 and new all-time closing high at 2051.80. Note how the VIX came back up in the afternoon to close at 13.86 only six pennies under the 200-day MA at 13.92 that will again signal market trouble (above VIX 13.92). Note also how copper was very weak today. If the global economy was strong, copper should be running strongly higher. The 8 MA is well above the 34 MA on the SPX 30-minute chart forecasting the bullish joy and bullish action for the hours ahead. For the 30-minute chart, the indicators are negatively diverged except for the RSI and MACD line that want to see another high. Interestingly, on the 1-hour chart, the indicators are all in negative divergence, albeit by a hair, and the last two candlesticks are creating a Tweezer Top. On the SPX 2-hour chart, the indicators are negatively diverged over the three-week period but closer-in over the last few hours, for today's upside rally, there is near-term long and strong momo with the MACD and money flow that will want another high in price. In addition, the MACD cross is now positive with the black line above the red line (bullish). What does all this mumbo-jumbo mean? The SPX is resetting with negative divergence again to create another move lower. One to three 2-hour candlesticks may be needed so the top should occur tomorrow (2 to 6 hours of trading time). During OpEx week, a Tuesday low typically leads to a Wednesday high. Today stocks simply ran higher from the get-go so the opening bell was the low. This jives with a top occurring tomorrow. In the last several days, the markets are pumped by the potential delay of the Japan sales tax hike, then by ECB's Draghi promising to buy government bonds in the weeks and months ahead, then Japan's Abe confirming the sales tax delay this morning creating today's boost, then Fed's Kocherlakota pumping stocks this afternoon as well as European officials further pumping the buying of sovereign bond idea. Look at how the European markets were a complete sea of green today running higher on easy money promises. The markets are purely central banker driven. The BOJ continues to bludgeon the yen with the dollar/yen pair now above 117 sending the Nikkei higher and will create further US stock buoyancy tomorrow if the dollar/yen stays above 117. The expectation is for stocks to top out tomorrow; it will depend if the 2-hour chart can completely negatively diverge across all indicators and if the MACD line cross above needs to turn negative again. Pay attention to the VIX 200-day MA at 13.92 again tomorrow. Bears need the VIX above 13.92 to stop the market rally, otherwise, they got nothing.

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