Thursday, December 18, 2014

SPX 2-Hour Chart

The positive divergence (green lines) bounces price off the bottom but interestingly, the case can be made for the MACD line and money flow actually leaking a touch lower as price printed its low. For positive divergence, price needs to print the low as the indicators slope higher. That weakness leaves the door open to lower prices. However, the Fed-induced rally is spectacular. The central bankers are the market. Stocks catapult higher and the indicators are long and strong wanting to see higher highs in this 2-hour time frame. The MACD lines create a positive cross and the stochastics are above 50% in bull territory with the RSI about to move above 50%. All are bullish indications. S&P futures are up strongly pointing to another 20 to 25 SPX handles after the opening bell.

There is a juicy gap at 2032-2035 that price may target for filling. The bottom standard deviation band was violated so a move back to the middle band occurs and the upper band remains in play at 2056 and falling. Thus, at least two to four candlesticks are needed to create neggie d so that is 4 to 8 hours of trading time that will take markets into this afternoon and tomorrow before a near-term top potentially forms; the 2032, 2040, 2046 and 2054 resistance levels may see action. The futures point to a strong open with price running to the 2032-2040 S/R zone filling the gap. The 200 EMA on the 60-minute chart is 2030 a critical bull-bear signal for the hours and days ahead so bears must hold 2030-ish or they will be dead in the water. Bulls win big above 2030. The 2040 level is the strongest of all S/R levels in the current price range environment. Above 2040 and the bulls will pop champagne corks enjoying a strong finish for the end of the year. If the bears hold the 2030-2040 zone this week into early next week, the market selling and downside will resume and the year will finish weak.

Key support/resistance is 2067, 2065, 2057, 2054, 2047 (20-day MA), 2046, 2040 (very strong overhead resistance), 2032, 2030 (200 EMA on the 60-minute), 2024, 2018, 2011, 2002-2003, 2003 (50-day MA), 1998, 1995 (20-week MA)1988 (100-day MA), 1985-1986, 1978, 1975 (150-day MA), 1973, 1968, 1964, 1964 (10-month MA) and then an air pocket to 1951. 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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