Saturday, October 10, 2015

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

Here is a look at the 2-hour to end the week of trading. Reference the prior two 2-hour charts. The idea is to wait for the negative divergence across all indicators to confirm a near-term top. The histogram, stochastics and money flow (red lines) are all neggie d wanting price to reverse to the downside and trend lower. That pesky MACD line, however, keeps poking a stick in the bear's eyes.

Note the Tweezer Top (red circle) that results in a pull back due to the negative divergence with histogram, oversold stoch's and the money flow but the MACD line printed that peak exactly at the second candlestick in the red circle. Thus, price still has a smidge of upside oomph. Interestingly, note how the upper standard deviation band (pink) has come back down into view at 2021 so this is a logical upside target.

Focus on the thin blue lines. As price likely comes up again to the 2020-2023 area, the indicators should form universal neggie d to tell you the top is in. The histogram, stoch's and money flow appear cooked so they should easily stay neggie d. The RSI and MACD, however, will need to stay under where the blue lines are shown to maintain negative divergence as price makes the new high. This tells you that price will be finally out of gas. If these two indicators poke out another high, then price needs another couple of candlesticks before it will roll over.

So if price heads up to 2020-2023 to lock in the neggie d, that will likely occur in the next candlestick or two so the projection is for price to peak Monday morning (as long as universal neggie d is printed as discussed above). Price still needs to back kiss the middle band at 1993.47 and rising since the upper band was violated.

Note the double top in stocks with price now at the mid-September highs.The daily chart suggests that price will pull back early next week as the 2-hour hints, however, the SPX will likely venture higher into the 2020's and perhaps 2030's late next week. 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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