Thursday, December 4, 2014

SPX Daily Chart New All-Time Highs

The rally off the mid-October low continues. This week, the Monday selloff was reversed by the PBOC hinting at more triple R cuts for Chinese banks (stimulus). Global stocks have rallied ever since carrying the happy party into the imminent ECB rate decision and press conference. The SPX prints a new all-time high at 2076.28 and new all-time closing high at 2074.33. The higher high in price occurs with the indicators negatively diverging (red lines). Typically price will venture a touch higher and if this is the case watch to see if the negative divergence holds (thin red lines) and if so, the top will be in. Of course the central bankers are the market and the ECB decision this morning can send the SPX wildly higher or wildly lower.

Remember the other day that sliver of positive juice (thin green lines) with the RSI and MACD line was enough to bring price up for another high. The chart is very weak. However, as always, the central banks will determine the outcome. The upper standard deviation band is at 2081 so that may get tagged today if Draghi delivers the dovish goods. The projection is for a down move to begin at anytime, today, tomorrow or early next week. It will depend on how successful Draghi is at pumping the stock markets higher. The ECB decision is at 7:45 AM EST (12:45 London time) and most importantly, the Draghi Press Conference is at 8:30 AM EST (1:30 PM London time). 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 7:50 AM: The ECB leaves the three key rates unchanged as was expected. The more important news is the Draghi Press Conference in forty minutes at 8:30 AM which will probably send stocks wildly in one direction or the other depending on how much he discusses the proposed full-blown QE sovereign bond purchasing program.

Note Added 10:07 AM:  Draghi lays an egg at the press conference stretching out the time period to announce new stimulus measures into the first-half of 2015. Traders were expecting Draghi to speak more dovishly and even announce plans for full-blown QE. Germany must be providing strong pressure behind the scenes. The ECB decision does not go as planned with the euro briefly jumping above 1.24 (euro was under 1.23 only a few hours ago). Euro is at 1.2387. European indexes turn negative. Europe needs the lower euro to stimulate the economy especially exporters and manufacturers. US stocks begin on the downside although the Nasdaq is holding up on the positive side. The VIX is at 12.54 flat on the day. So the bears do not have much strength if they cannot lift volatility. At the same time, the bulls are not pushing volatility lower to help their cause. Bears got nothing without volatility moving above 13 and higher. The SPX daily chart receives a spankdown from the neggie d discussed above. The MACD cross remains negative. The bears should be able to develop negativity although the Monthly Jobs Report hits tomorrow morning and traders may want to idle sideways and wait for that number to make a commitment. Since Draghi was not dovish enough, the bears have the advantage and the negative chart aspects above are pushing prices lower, albeit marginally lower, to begin the day. The dollar/yen moves above 120 not seen since 2007 printing at 120.15.

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