Monday, March 2, 2015

SPX Daily Chart Upward-Sloping Channel Overbot Negative Divergence Developing

Last week, the indicators on the SPX daily chart was showing some near term juice so a move higher was expected and is occurring. The chart is negatively diverged across the four-month time frame and the very near term (the last few days) except the MACD line (neon green line) that wants another high in price. The rising wedge, overbot conditions and neggie d created the spank down four days ago but the MACD was not quite ready. Note, however, that the MACD is neggie d over the four-month period a sign of weakness. So the bears are all set to sell the market except for that pesky MACD.

Price has touched the upper or lower rails of the upward-sloping channel 8 times since December so that red channel carries some clout. Perhaps price will seek the lower rail again now down at 2010-2025. Price also needs to back kiss the 20 and 50-day MA's especially the 20-day MA at 2084 and rising. The bears are beaten everyday for the last month but they will fight back starting anytime over the next 1-3 days.

The projection is that price comes up for another higher high either today, or tomorrow, or even Wednesday but when that occurs the MACD line should print negative divergence (the MACD will stay below that thin red line in the right margin) and that will lock in neggie d with all indicators in both the few-candlestick period and the four-month period and begin smacking price lower. The full moon hits on Thursday at 1 PM EST and stocks are typically bullish moving through the full moon, so this throws a wrench in the works. The SPX needs to print the higher higher in price to lock in the neggie d on the MACD, so the best thing for bears would actually be for price to rally higher and place the top today. If not, perhaps price comes up for the top tomorrow. If not, and price sells off for a day or two, without printing the higher high in price, it will still want to come back up so that may be in concert with moving through the full moon. Thus the bulls may be able to keep things elevated this week but even so the upside appears very limited.

To move away from that windbag rambling, in a nutshell, the SPX should top out any day, you will see the neggie d on the MACD and that will send price lower to the 20 and 50 day moving averages and then perhaps the lower rail of the channel. Sideways to sideways down going forward. 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 8:39 PM: The bulls ran stocks higher in the afternoon with the SPX printing a new all-time closing high at 2117.39 but not a new all-time high. So price comes back up for a matching or higher high just as the long and strong MACD over the last few days wanted (as discussed above). With today's elevated price, the MACD remains below the peak from 3 or 4 days ago, thus, neggie d and the chart is set up for the bears to begin a spankdown. However, since price has a big up today a further move up is likely (momentum) with price taking out the all-time high at 2119 and change; its only a couple points higher. Watch the MACD line; as long as it does not come up above the peak from a few days ago, the bears will create a spankdown for stocks beginning tomorrow or Wednesday. If the MACD line edges up above the high from a few days ago, the bulls have more gusto for a few more days when the top will print. The guess would be a print at 2018-2022 tomorrow which serves as the near term top in the market probably after lunch time. If the MACD prints higher, then the top will likely occur the end of the week or early next week at 2025-2032. Copper is trading weak and this will create market weakness if it remains in place overnight.

Note Added 2:35 PM EST on Tuesday afternoon, 3/3/15: The bears came to play today from the get-go spanking equities down due to the neggie d. Copper weakness sends stocks lower. Watch the bull-bear level at JJC 32.01 (identified by the Keybot the Quant algorithm) to see if bulls can stage a comeback. JJC is at 31.78 in the bear camp causing market weakness.

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