Sunday, February 22, 2015

SPX S&P 500 Monthly Chart Overbot Rising Wedge Negative Divergence Price Extended

With the universal negative divergence creating the January spankdown there was no reason for price to come back up for a higher high, but it did. The central bankers are powerful and keep pumping stocks higher last week with the ECB bank rolling Greece that is insolvent. Nonetheless, the higher high in price continues with negative divergence for this year as shown by the short red lines on the right hand side for each indicator. The MACD line cross turns positive placing a feather in the bull's cap hinting that the juice may develop for more upside, however, the indicators are all neggie d including the MACD line.

The purple dots show price extended far above the moving averages requiring a mean reversion like the 2007 market top. Note how price fell out of the rising wedge and now comes back up for a back kiss of the lower wedge line for a bounce or die decision. The collapses from rising wedges can be quite dramatic. The projection is that a multi-year top is at hand. The only thing bullish on the chart is the positive MACD cross so bears would need to turn the cross negative pronto.

The INDU (Dow Industrials) monthly chart is the exact same technical-wise. Ditto the COMPQ (Nasdaq Composite). The MACD line on the Nasdaq monthly is squeezing out the tiniest higher high but the whole week has to play out before the final monthly print occurs for the chart. Watch the MACD on the COMPQ monthly chart to see if it remains negatively diverged, or not. If the MACD line squeezes out a tiny slope higher then the market top may be delayed for a month or two. The RUT (Russell 2000 Small Caps) monthly chart is negatively diverged although trying to build momentum in the short term (one or two months). 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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