Tuesday, May 19, 2015

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

The SPX is setting up for a top. The maroon lines show negative divergence across all indicators for the one week and longer time frames; also in the very short term the MACD histogram, stochastics and ROC are negatively diverged wanting to see lower prices. The stochastics are overbot. The stochastics and ROC are weak and bleak over the last few hours also bearish indications. The fly in the ointment for market bears is the two green lines because when price printed the peak high, the RSI was a smidge higher and ditto the MACD line by a hair. This leaves the door open for one to three more candlesticks to print to allow the RSI and MACD to roll over with neggie d which is 2 to 6 hours of trading time. Thus, a top in the SPX should be expected for Wednesday.

The RSI did not move into overbot territory so if the central bankers come out with more happy talk like the ECB this morning, the bulls may extend the elevated price for another couple days with the RSI moving into overbot territory. Barring the central bankers pumping markets with happy talk, the SPX should peak out and roll over on Wednesday. The red dots show price extended above the moving averages so a mean reversion lower is in play. If the retail company earnings are weak that may provide enough bear juice to roll the SPX over to the downside. Price may come up as stated to print at 2133 again or a smidge higher but that should top out the SPX due to the universal neggie d. 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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