Tuesday, February 17, 2015

SPX Daily Chart Upper Band Violation

The bulls continue pushing stocks higher goosed by happy news bites concerning the Greece bailout drama. The new all-time price high above SPX 2100 comes with negative divergence (red lines) and overbot stochastics but there is near-term long and strong juice available (green lines) from the MACD line and money flow. Thus, a pull back would be expected but then price should come back up for another higher high in price to satisfy that near term bull juice. At that time, a few days ahead, the expectation would be that the near term juice ends with indicators rolling over, and the four-month negative divergence lines will kick in negativity for stocks.

Price is violating the upper standard deviation line currently up at 2105 so a move back to the middle line, at a minimum, at 2049 and rising, would be expected going forward. The lower band is in play as well. Keystone's 80/20 rule says 8's typically lead to 2's so 2098 leads to 2102 and 2080 leads to 2120. The breach of 1800 leads to 2200 which will make the market bulls salivate for this year if the guideline should play out. The upper trend line in the chart using the prior two tops would place price in the 2120-2130 to satisfy the 80/20 rule, however, the current status of the green lines is not enough strength to push price that far up. Watch the RSI that has gone flat. If the RSI curls higher and starts to slope upwards moving towards the 70% level and higher, that will create upside juice that can expand price higher. If the RSI remains flat price will roll over to the downside in the days ahead.

The current expectation would be for two jog moves to occur and then the indicators should line up with universal neggie d and create the downside. So down up down up down would be four or five days for the top--interestingly exactly at Fed Chair Yellen's testimony before Congress next Tuesday and Wednesday. For OpEx week, this week, a Tuesday low usually leads to a Wednesday high. The new moon hits tomorrow evening and stocks are typically weak through the new moon. Stocks may want to remain buoyant into Yellen's testimony so the stars are aligning for the scenario of sideways into next week where a top is likely to occur. So some jogging action between 2080-2110 into next week where the top occurs probably after Yellen's testimony. 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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