Saturday, January 3, 2015

SPX Monthly Chart Overbot Rising Wedge Negative Divergence

The wait over the last few months for negative divergence to form across all indicators on the monthly chart (red lines) is over. Remember how the MACD line was still sloping higher wanting a higher high in price? It has occurred and the chart is now set up with universal neggie d. With the price high in December, all indicators are neggie d and the MACD is rolling over. Stick a fork in it; the SPX is cooked and it is likely printing a multi-year top in Q1 just like 2000 and 2007. You are witnessing the exact conception of the market top. Of course there is one wild card and that is the ongoing global central banker collusion. Technical-wise, the six-year rally is over.

The overbot conditions, rising wedge and neggie d will create a spankdown. Price will lose the lower red trend line and then probably come back up for a back kiss the month after that and then likely fall in earnest. The collapses from rising wedges can be quite dramatic. Watch for the MACD negative cross to confirm that a somber death dirge is echoing through the air.

Watch the 10-month MA at 1988 and rising as a key price level. The old-timer's watch this closely as a major overall market signal. The 12-month MA is 1967 and rising and is one of Keystone's key cyclical indicators representing the cliff edge for markets. If the 12-month MA fails, the stock market is moving into a potential crash position.

The chart is cooked and considering it is a monthly chart is likely identifying a significant multi-year top where the current highs will not be seen again for several years perhaps 2020 or later. Makes you rethink about all your long positions, doesn't it? If you enjoyed the long six-year rally, cashing out and simply letting your money sit idle for a few months is a very wise play. More adventurous traders can short the market moving forward.

The all-time high is SPX 2094. Keystone's 80/20 rule says 8's lead to 2's so the breach of 2080 opens the door to 2120's. The chart above has no reason to print another price high again technically; it is out of gas, however, if the central bankers pump, like the BOJ may pump to begin their year of trading on Monday, the bulls may be able to squeeze out the 2100+ print. The main takeaway, however, is that the chart has peaked technically and it hints that even if the central banker global collusion continues, the 'emperor's will be exposed for not wearing any clothes' (Hans Christian Andersen).

The Dow monthly chart is the same with the same dire analysis. Ditto the Nasdaq monthly chart although the MACD line printed its high with the price high and may require a jog move (down-up-down) for January-March. The RUT monthly chart is also negatively diverged across its indicators although in the very near term it may have some sideways with an upward bias juice for January-February before price should roll over for the sustainable downside. The stars are aligning for the market bears in Q1.

The ECB meets on 1/22/15 and the Fed is on 1/28/15 so a scenario may develop with weakness in January but the sick Keynesian central bankers save the day at the end of the month to provide a month or two more of buoyancy. The central banker schtick is getting old and perhaps in 2015 confidence will be lost in the Keynesian golden goose. Ignoring the central banker modern-day money-changers, the chart above says the bears will growl in 2015. 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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