Wednesday, December 24, 2014

SPX 60-Minute Chart 200 EMA Cross Overbot Rising Wedge Negative Divergence

The 1-hour chart is set up with negative divergence, overbot conditions and a rising wedge pattern so a market top and spank down is on tap, however, note the peak in RSI occurs with the peak in the price candlestick, so the sneaky bulls want to squeeze out another couple candlesticks (a couple hours) and test of the high at 2087-ish before rolling over. S&P futures are +1 pointing to a move to perhaps 2083-2087 at the opening bell and that would be good enough (as long as RSI stays under the peak high) and firmly lock in the top with universal neggie d. The indicators on the 2-hour chart are rolling over but another couple hours or so of sideways to sideways up would help firmly set the neggie d in place in that time frame as well.

The 2040 level is very strong S/R in fact the strongest level in the entire 2000-2100 range. Price will need to show respect and back kiss this level. In addition, the critical 200 EMA on the 60-minute now at 2039.60 is one of Keystone's key short-term signals which is currently indicating bullish markets for the hours and days ahead. This critical 200 EMA needs back tested as well and happens to be staggering sideways at the same 2040-ish level so this will create a magnet for price.

The standard deviation bands are squeezing in so price is either about to launch to 2100 to end the year in the burst of December positive seasonality and the Santa Claus rally through 1/5/15, or, drop like a stone in the coming days to end the year in a sour mood. As the old Wall Street adage says, "If Santa Claus fails to call, the bears may arrive on Broad and Wall." (The Santa Claus rally occurs from 12/26/14 through 1/5/15.) The complacency shown on the CPC chart is in the bear camp signaling that a near-term top is at hand. The Keybot the Quant algorithm remains long and focused on VIX 14.69. Bulls win big into the end of the year if VIX drops under 14.69. Bears win big into the end of the year if VIX stays above 14.69 (now at 14.80 teetering on the bull-bear line).

The projection is for a near-term selloff to begin for stocks at anytime; perhaps for the last couple hours of trading today. Markets close at 1 PM EST. A VIX under 14.69 would poke a hole in this near-term negative thesis. If VIX stays above 14.69, the low CPC will forecast another near-term market top and equities should begin selling off. 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 9:47 AM Christmas Day: The bulls continue higher setting new all-time record highs for the SPX, Dow and UTIL. Stocks faded into the closing bell. The VIX is at 14.37 (below the critical 14.69 identified by the Keybot the Quant algorithm) a serious blow to the bears but let a few days play out and watch VIX 14.69 as the most important metric into early next week. The SPX 2-hour and 1-hour charts are agreeing with universal negative divergence for all indicators (the RSI, however, never reached overbot conditions on the 2-hour) which finally exerted influence late in the Christmas Eve session but the bears ran out of time. Markets should continue lower unless a positive news event occurs in the coming hours. A move lower in stocks will be meaningless unless the bears send the VIX back above 14.69. Merry Christmas to all! Enjoy the sacred day.

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