Tuesday, February 24, 2015

SPX S&P 500 2-Hour Chart Overbot Negative Divergence

The SPX 2-hour chart is experiencing lots of drama. The SPX prints new all-time highs today. All the negative divergence spankdowns are highlighted before they occur (red arrows) but he bears have no sustainable downside juice and the bulls reassert themselves. The red lines show the firm negative divergence remaining in place wanting to see lower lows in price going forward but the bulls keep finding a way to boost stocks higher. The three circles show the news event pops since last week. The green circle on the left is the Ukraine ceasefire agreement that launched stocks. Who cares that the ceasefire is a joke and people continue to die daily.

The middle pink circle is the Greece bailout agreement rally. The current blue circle is the expected Federal Reserve Congressional Testimony rally as explained in a prior article. The CPC and CPCE put/calls signal complacency in markets and a near-term top likely at any time any day ahead. The VIX drops to a 13-handle further verifying market complacency and lack of fear. Traders are not worried since they know the central bankers will push stocks higher forever. Every day is a party. Offer a toast to Fed Chair Yellen as you sip the easy money wine.

The overbot conditions and neggie d should spank price down here and this one should have some legs due to the low put/calls. Price is extended above the moving averages and needs to receive a smack down. The tiny bit of juice with RSI and the MACD line may push the top out for one or two candlesticks which is 2 to 4 hours so that would be any time from now through the closing bell for the market top. This is so close to the bell that you have to leave the door open for the top to occur after the opening bell tomorrow as well, but it should be coming anytime ove the coming hours.

Watch the MACD cross that is currently negative. If the cross stays negative (red circle) then the top will occur sooner rather than in a few hours. If the MACD cross turns positive (black line above red line) the near term top probably does not occur until tomorrow or Thursday. 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 12:15 PM: Boom. The MACD lines cross forming a positive cross; black line 8.207 and red line 8.180. This indicates the bulls have more juice for higher prices in the SPX, however, the latest candlestick now printing comes with a flat RSI and lower stochastics. Thus, despite the positive MACD cross, the market top likely remains very near and it will not be surprising to see stocks roll over from here to the downside during the afternoon.

Note Added 12:19 PM: SPX 2113.31. JJC 31.48. VIX 14.15.

Note Added 2:36 PM: SPX 2113.42. JJC 31.52. VIX 13.86. Stocks take a dip lower but recover. Note the lower volatility that creates the market buoyancy.. Copper is flat. For the 2-hour chart above price has printed matching or higher highs for the third consecutive candlestick (the last 5 hours), and negative divergence is in place over the multi-day and multi-hour period. The money flow has a smidge of long and strong juice that may create another one to three hours of buoyancy but the top appears at hand. The MACD cross turns negative which may help roll things over to the downside. Once the downside begins it should get going quickly. Fed Chair Yellen testifies before the House tomorrow so long traders are weighing if they should stick around one more day since equities are usually higher when the Fed provides testimony. The SPX 1-hour chart is negatively diverged across all indicators so its ready to spank price lower now. The bears have it served up on a platter if they want it, if so they have to start pushing volatility higher and copper and financials lower.

Note Added 2:53 PM: SPX 2114.78. JJC 31.52. VIX 13.76. The bulls are stepping on the throat of volatility the VIX now down to 13.76 sending stocks higher. Whoa, big push higher with VIX down to 13.71.... 13.66.  SPX leaps to 2115.23. Dow is up 100 points. Wild stuff. Comically, the MACD cross on the 2-hour chart above turns positive again so the sideways battle continues. Bulls may be pushing for one more up into Yellen tomorrow then give up the ghost.

Note Added 3:41 PM: SPX 2117.82. JJC 31.52. VIX 13.58. Copper is not moving. The bulls are squashing volatility sending stocks to new all-time highs. The RSI and MACD and ROC are now sloping higher in the very short term, long and strong, on the 2-hour chart so another one to 3 hours are needed to top out. So the bulls will push it into Yellen's testimony before the House tomorrow.

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