Monday, May 11, 2015

SPX S&P 500 Daily Chart Rising Wedge

The choppy sideways party continues for 2015 with the SPX currently deciding if it wants to break up and out to a new higher range, or not. Price is knocking up against the upper red trend lines of the rising wedge pattern at 2121-2128. The all-time record closing high is 2118 and all-time intraday high 2126 both printing in late April. SPX begins the week playing around at 2115.

The red rising wedge is ominous since the collapses from the pattern can be quite dramatic. Price failed the lower trend line of the wedge last Wednesday and Thursday but the bulls recovered riding the jobs report rally. The SPX is back inside the rising wedge. Bulls win big above 2121-2127. Bears win big under 2090 and the rising wedge pattern forecasts this outcome.

The red lines show the negative divergence spank downs taking place and predictable before they occur. Currently, price does not quite match the prior highs over the last couple weeks so negative divergence cannot exist as yet but watch the maroon lines in the right margin. If price sneaks higher above 2118 and the indicators remain below the maroon lines, neggie d will exist creating a top and spank price lower.

The ADX is down at 14 and the strong uptrend from October ended in February (pink box) with the ADX dropping under 25-ish. A strong uptrend, or downtrend will not be identified until the ADX is back above 25-ish. The small brown circles show distribution taking place like gangbusters. Following each low volume up day, the following day is strong volume selling; distribution. The smart money is passing off shares to Joe Sixpack and Frank Retail Investor.

The expectation is lower prices ahead with perhaps a wicked collapse on tap from the rising wedge pattern but the central bankers remain powerful and traders have a never-ending trust in the power of Keynesian spending. 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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