Sunday, October 18, 2015

SPX S&P 500 2-Hour Chart

We watched the 2-hour chart top out last week waiting for that MACDline to roll over with a new high in price which occur so a spank down takes place. The bears are high-fiving each other and popping champagne corks as stocks begin selling off but on last Wednesday evening the short-sellers were frantically trying to put the corks back in the bottles since the celebration to the downside abruptly ended. Jon Hilsenrath, who many believe to have an inside track into Fed thinking, releases an article at the WSJ web site that says the first rate hike will not take place until into 2016. Bingo.

Bulls begin buying futures with reckless abandon since Hilsenrath provided the all-clear signal. S&P futures rocketed nearly 15 handles higher within about one hour's time after the article was released. Other central banker dovish talk followed from the PBOC, BOJ, and Fed, and even ECB's Nowotny hinting at more QE, so the bull party was in full swing. The central bankers are the market. You have to be blind to not see this occur time and time again.

After the central bankers goose markets a small amount of time is needed so the charts can build in the new information. Of course price sky rockets on Thursday and Friday last week ignoring the prior negative divergence, however, the new highs are met with more neggie d. The MACD line and money flow is trying to squeeze out a tiny bit more juice for a couple hours but it looks good for a top to occur as the new week of trading is beginning. This would jive with the put/call and Skew charts calling for a move lower in stocks, however, the SPX daily chart wants to see another high after weakness.

Thus, perhaps markets sell off on Monday maybe Tuesday, then recover Tuesday Wednesday, then a more significant near term top occurs say mid-week which would receive the negative divergence blessing from the daily chart. The 2-hour chart would likely be in a downtrend a couple days from now. Ths scenario remains in line with the low put/call ratios and high Skew that want to see a top in stocks this week or very very soon.

Price is back at the top standard deviation band so a move back to the middle band at 2013 is on the table. 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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