Monday, November 10, 2014

SPX 30-Minute Chart 8/34 MA Cross Rising Wedge Negative Divergence Tight Standard Deviation Bands to Squeeze Out Big Move

The 8 MA is above the 34 MA on the SPX 30-minute chart which signals bullish markets for the hours ahead. The bears created a negative 8/34 cross last Tuesday and started to celebrate only to receive a smack in the face last Wednesday as the republicans sweep the table and traders believe a more business-friendly government will begin. The positive 8/34 cross occurs and the bear beatings continue without mercy.

The red lines show the rising wedge pattern and negative divergence creating Friday's top. Monday's trade is underway and price is creeping higher to begin the day perhaps trying to tag the upper band at 2034. However, the spank down occurs with universal negative divergence so there is really no reason for price to come back up again and the 2-hour chart (previously posted) is neggie d across all its indicators as well. Perhaps the tight bands on the 2-hour chart did not yet resolve since the bands above on the 30-minute continue to squeeze-in. There is likely a sharp 20 or 30-handle move at the doorstep to begin at any time. The assumption is that a spankdown will occur. The market bears need the 8/34 negative cross or they got nothing. The MACD cross is negative which is encouraging for the short side.

Keybot the Quant remains long to begin the new week of trading. Volatility and copper are the two parameters most influencing market direction currently (as per the algo). Watch VIX 14.09 and JJC 37.08. Bulls need higher copper, JJC above 37.08, to create another stock market leg higher. Bears need higher volatility, VIX above 14.09, to create a leg lower and stop the market upside. If VIX remains under 14.09 and JJC under 37.08, equities will stagger sideways. 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 9:48 AM: The day is off and stumbling. SPX is 2032 with a HOD 2033.62. VIX is 13.15 a hair higher so either stocks are wrong or volatility is wrong (the SPX and VIX should move in the opposite directions). JJC is 36.60 remaining in the bear camp. So far, status quo, market stagger sideways. The standard deviation bands are squeezing in tighter and tighter for the 30-minute chart. Picture a tube of toothpaste that you are squeezing with the cap on. As you increase pressure, boom, the explosion will be violent. The SPX should take a sharp move up or down in the minute and hourly time frames beginning at any time. The 30-minute and 2-hour charts say down but you never know if the Fed or other central banker is going to grab a microphone over the next hour and promise more stimulus.

Note Added 10:52 AM: The VIX was wrong. VIX loses support at 13.10 and collapses through 13 down to 12.58 creating the bull fuel. The SPX prints a new all-time intraday high at 2036.78. The bulls are unstoppable. Here's a huge spike higher up through the upper band on the 30-minute chart above at 2036. It is surprising to see the squeeze occurring higher. By crushing the VIX lower, the SPX moves higher.

Note Added 10:56 AM: Another new all-time high at 2037.60. VIX collapses to 12.53. JJC 36.62. TRIN is flat neutral at 0.97 unwilling to choose a side today. The upper standard deviation band on the 60-minute chart is 2040 so price is within three points of tagging that goal. Price tags the upper band on the 1-hour chart at 2037. The Dow Industrials and Dow Transports print new all-time highs. The week is starting out with a happy tone. The Dow is above 17.6K. Bears got nothing unless they can push the VIX higher from 12.52.

Note Added 11:06 AM: Dollar/yen 114.64. There you go; look no further for a reason for the upside recovery. The dollar/yen currency pair jumps from 114.00 to 114.64 so the weaker yen sends stocks higher and volatility lower. Banzai!! The BOJ rides to the rescue this morning with Governor Kuroda printing yen like a madman that flows into the stock market pushing the indexes higher. The same technical analysis holds above and is in a fight against the power of the central bankers. All-time high 2037.60. If the bears create a sharp move lower they will have to start the move within the next hour or they will likely be slapped around the remainder of the day.

Note Added 3:21 PM: Dollar/yen 114.90 almost one point off the low. Banzai! The tight bands on the 30-minute squeeze out the move from 2024 to 2037 that occurred after the opening bell but that move is paltry; the bands oddly creep outwards and a far bigger move either up or down would have been expected. Price stutters sideways since. The 1-hour chart bands have created a band so tight and long it looks like a tunnel continuing for the last four days. It all looks fishy so a sharp move is still expected for the SPX and the charts continue to set up for a down move due to the neggie d. The 8 MA remains above the 34 MA on the 30-minute signaling bullish markets for the hours ahead. VIX is at 12.46 near or at the day's lows creating bull fuel. JJC drops to 36.47 so bulls do not receive any help from copper in fact copper is weak. The low volatility creates upside joy--along with the BOJ bludgeoning the yen. SPX prints another new all-time high at 2038.70. TRIN is 1.27 in the 1.10-1.30 range for the last couple hours which is representative of steady-eddy selling the only thing is that equities are floating higher instead.

Note Added 3:34 PM: SPX 2036. HOD 2038.70. VIX 12.48. JJC 36.39.

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