Saturday, April 25, 2015

SPX S&P 500 Weekly Chart Rising Wedge Overbot Negative Divergence

The SPX weekly chart trucks higher with a rising wedge pattern (bearish), overbot stochastics and negative divergence (red lines). The green lines for the RSI, stochastics and money flow, however, show the momentum over the last month with the bulls wanting to squeeze out a little more upside juice. Overall, in the multi-week and multi-month time frames price is running out of oomph to move higher. A rupture of the lower red trend line at 2100-ish will create downside momo.

The 20-week MA is 2068 the same level as where April began with only four days remaining in the month. This level has to be respected as a possibility for the week ahead. Watch the MACD cross, currently negative, to see if the bulls can squeeze out anymore upside juice, or not.

The blue circles show the volume behavior over the last few months. The new record price highs come with far less volume than mid-March when the same price levels were explored. A strong market should have easily surpassed the prior volume in March. Ditto the strong volume behavior in December at highs near 2100-ish. Price keeps moving to new highs above 2090 but each time the volume weakens rather than strengthens hinting at a lack of conviction.

Note the strongest volume candlestick for the selling event last October. This is when the global central bankers colluded to stick-save the markets and prevent a crash. It is prudent to expect price to revisit the 1825-1910 area to see how volume stacks up against the October candlestick.

The near-term momo (green lines) may allow the bulls to play around in the apex of the rising wedge (after a near-term selloff occurs due to the uber complacency with the CPC put/call) but the expectation is for price to roll over to the downside moving forward. Price is extending above the moving averages which will create a mean reversion to the downside. 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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