Tuesday, May 26, 2015

SPX S&P 500 Daily Chart Rising Wedge Versus Ascending Triangle Negative Divergence Upper Band Violation Strong Trend Higher is Lost

The battle of the red bearish rising wedge versus the green bullish ascending triangle continues. Bulls threw confetti in the air and started drinking Fed booze like madmen six days ago with the breakout from 2120. Analysts guarantee SPX 2200 is next and are drunk as skunks celebrating all weekend long. However, price instead stalls at the top rail of the rising wedge as Keystone previously highlighted. The bulls do not win until they nullify the rising wedge pattern with a breakout above 2130-2135 and higher which will then set the path higher to 2180-2200. The bears need to spank price lower from the upper red trend line and send it down through the bottom rail of the wedge at 2110-ish which will begin accelerating equities to the downside.

Price tagged the upper standard deviation band so a move to the middle band, the 20-day MA, at 2110-ish is on the table and also a move to the lower band at 2079. The 2108-2110 level continues to identify itself as a key support gauntlet. The ADX line is down to 10 which is very interesting. There is no longer a strong trend occurring in the SPX's move higher despite the record all-time highs. The strong trend higher for the SPX ended in February (ADX under 23-25). The red lines show negative divergence across all indicators. The MACD line is trying to roll over but today needs to play out to see if it does or if it can eke out a couple more days of elevated stocks prices before giving up the ghost. The stochastics are overbot.

Bears need the RSI under 50 to prove they have the beans to take stocks lower. The expectation is for the SPX to leak lower for a potential major test of 2108-2110 where a critical bounce or die decision will be made. May began at 2086 with only four days remaining in the month; EOM is Friday. 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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