Sunday, February 8, 2015

SPX Monthly Chart Overbot Rising Wedge Negative Divergence

January printed a negative month creating two consecutive down months for the firs time since early 2012. The SPX all-time high is 2094 on 12/29/14. Keystone has pointed out the neggie d in the chart (short red lines) over the last couple months. The negative divergence took six years to fully form but it is in place now for a multi-year stock market top in the offing. On Friday, price leaped to 2072 only 12 points from testing the all-time high, but then collapsed 17 handles. A negative MACD cross occurs which is bearish.

Can price come up to make new all-time highs? Sure it can, however, the universal negative divergence across all indicators, red rising wedge and overbot conditions want to see lower lows in price going forward. In other words, there is no reason for price to come up to make new highs again; the energy is spent. If price does come up for a new all-time high check the indicators. Chances are they will all print lower highs as price prints the higher high, maintaining the neggie d, which would only seal the fate of the market with a substantive top.

The old-timer's like to watch the 10-month MA now at 1999 as a key level. Bad things happen to the stock market when the 10-mth MA ruptures. Many algorithms have this programmed in and the 10-mth MA cross is programmed into the Keybot the Quant algorithm as a parameter. The 12-month MA now at 1978.45 is one of Keystone's cyclical market signals. Really bad things happen to stocks under the 12-month MA; it is called the cliff. The SPX teased down to these levels in October and started pushing down through. That is why the global central bankers colluded creating a coordinated daily money pump to save markets from collapsing.

Price is extended above the 10-mth MA above the 12 MA above the 20 above the 200, very extended, so a mean reversion lower is desperately needed. Remember, the collapses from rising wedges can be quite dramatic. The projection is that a multi-year stock market top is in place and at hand, now, or within the next couple months if one more spurt occurs as discussed above. Once stocks begin selling off, watch those 10 and 12-month MA's levels. The move lower may accelerate very fast catching many complacent traders off guard. Any long holding that you are not willing to hold for a few years should probably be exited. 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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