Friday, December 5, 2014

SPX 2-Hour Chart

The bulls are running higher for another day after the strong 321K jobs number. The PBOC and ECB pumps this week send stocks higher and the Dow is knocking on 18K. Traders, analysts and pundits are already celebrating donning imprinted 18K hats as they sip the Fed wine and mainline the PBOC crack. The newspaper headline writer's are salivating over the Dow 18K milestone so close they can taste it.

The 2-hour chart may begin a new candlestick at 2 PM which will provide more information. Lately, the tops are easy to call due to negative divergence and then bottoms occur when one of the central bankers step in to save the day. Wash, rinse and repeat. Since the indicators are long and strong in the VST (short green lines) another one to three candlesticks are probably needed before price rolls over to the downside so anywhere from now through 3 or 4 hours. If the move stretches out it will take the markets into Monday morning to top out. 

Over the last month the chart is negatively diverged across all indicators (red lines); this will beat the SPX lower. The strength in the nearer term with the MACD, stochastic and money flow long and strong profiles will likely create further buoyancy moving towards the weekend (minutes and hours). The stochatics are overbot. The MACD line cross is positive favoring bulls. The upper standard deviation band is 2083 and remains in play. The expectation would be for price to top out this afternoon or on Monday morning between this current 2077 level and 2085.

The six-week rally has not taken a rest so you would think the pull back would be sooner rather than later. VIX is 11.78 so the bulls are using lower volatility as the upside market fuel. Bears need VIX above 12 then above 13 or they got nothing. Interestingly, bulls need higher copper to lock in a new leg higher for equities but copper is actually trading lower today. Pay attention to volatililty and copper. Keybot the Quant algorithm remains long and considers these two parameters the most important in respect to influencing stock market direction currently; watch VIX 14.48 and JJC 36.35 as bull-bear lines in the sand (identified by the algorithm). If the bulls plan on running stocks far higher copper should be strongly higher now not weaker. JJC is printing at 35.04. 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 2:00 PM: The 2-hour chart begins a new candlestick so this candlestick will run into the closing bell then the next candlestick will be 9:30 AM to 11:30 AM on Monday. Over the last two hours that money flow that was pointing up is now directly sideways and not as enthusiastic.

Note Added 7:29 PM: The VIX moved higher above 12 creating the afternoon lull in stocks but then dropped to 11.82 into the closing bell that created the spurt higher in stocks to end the week. Volatility and copper will be important for next week. For the 2-hour chart above, the MACD line continues higher, long and strong, in the very near term, so price may need another couple of candlesticks to produce neggie d for the MACD to create the top, so that is 1 to 4 hours time, so sometime Monday a top should occur. This leaves the door open to the Dow 18K print on Monday morning. The bulls continue higher day after day and with low volatility the bears got nothing. The SPX should top out now and pull back. Markets are typically higher to begin the new month as new money enters, which occurs this week. The full moon is 7:27 AM EST twelve hours away and equities are typically bullish moving through the full moon so this is a feather in the bull's caps to start Monday positively. Tax loss selling occurs early December so this pressure may occur next week. The budget deadline for Congress to keep the government operating is Thursday, 12/11/14, only a few days away. CPCE put/call ratio is down to 0.50 indicating market complacency. The headline writer's did not receive their Dow 18K print for the weekend.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.