Wednesday, October 28, 2015

SPX S&P 500 2-Hour Chart Negative Divergence

The charts are pricing in the central banker money pump over the last couple weeks and the 2-hour comes up for another high but all the indicators are negatively diverged. The expectation is for a spank down in this 2-hour time frame to begin at any time forward. The bulls are running higher today with a 13-point gain. The Fed decision is at 2 PM EST so that may create wild action one way or the other. If the Fed was not on tap, the chart says price should retreat from these levels to take a rest.

The BOJ decision on Friday morning, which will be known before US markets open on Friday morning is far more important since it will create volatility in the yen and global markets. If the smack down occurs now in this 2-hour time frame as the neggie d suggests, and the weakness continues for a few candlesticks of time that would place the market at Friday morning when the BOJ decision will be known and the bulls may then step back in to take the SPX back up. The RUT small caps launch +2.1% today a huge move.

Note the gap below at 2053-2060. This places the SPX on an island so an island reversal pattern is possible where price would come down and then fall through the gap from 2060 to under 2053 in a heartbeat. Or, price may simply come down to fill the gap between 2053 and  2060. There  are many moving averages in this area that will influence price. 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.

Note Added 8:57 PM EST: Now you see why the central banker caveat must always be mentioned. The Fed pumps stocks higher again today after the rate decision. Stocks initially fell, with the help of the neggie d above, but as the Fed statement was viewed more dovishly with a rate hike not likely until next year, stocks catapulted higher and did not look back. So like prior gooses, the chart will need a little time to price it in. The central bankers are in a full contact pumping mode. On 10/14/15, the Hilsenrath/Fed rally started the stock market orgy. This would keep things elevated a few days until ECB Presdient Draghi could provide lip service on more QE on 10/22/15. Markets took another leg higher. Then on 10/23/15, the PBOC cuts rates and bank triple R's to goose stocks further. Just when the central banker pumping appeared to be subsiding, boom, today another Fed pump occurs. Then the grandaddy of all pumpers, the BOJ, may provide easy money crack cocaine on Friday morning. It is obscene. These money printing madmen are out of control. They worship at a Keynesian altar. The 2-hour chart creates a spank down but price recovers this afternoon; the latest candlestick prints a hanging man that typically denotes a trend change. In other words, the same analysis holds as described above. Indicators remain neggie d so the pull back would be expected despite the goosing by the Fed today. The BOJ on Friday morning, however, is another wild card that may keep the central banker orgy alive. The CPCE put/call ratio drops to 0.54. You know what that means. The CPC is lower as well. Complacency is back in vogue so the put/calls indicate a market top is in play for the days ahead.

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