Tuesday, November 3, 2015

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

The 2-hour chart has been a recent focus so we can stick with the progress of this chart. The central bankers keep nullifying the affect of negative divergence but as long as the central bankers do not announce another money pump, equities should retreat. The SPX is at 2105 which opens the door to 2110 price resistance (see the SPX S/R missive previously posted for support and resistance levels) since the important and strong 2099-2103 resistance level is taken out. Market bears need price under 2099 to begin growling. The upper standard deviation band is at 2109 and in play although price did already tag the upper band three candlesticks ago (6 hours of trading time ago) so a trip back down to the middle band, now at 2087 and rising, is firmly in play regardless of whether price moves higher from here or not.

The overbot conditions, universal negative divergence (price moving higher but all the chart indicators are sloping down) and rising wedge pattern should send stocks lower as the day plays out. 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 3:20 PM EST: The bulls keep running and attack the 2109-2110 resistance and bust up through. The SPX daily chart has the long and strong MACD line as previously discussed so price will want to come back up again after any pull back but in this shorter term 2-hour time frame the bulls will not let any pull back occur. The LOD is 2097 so the bears tried to push under the 2099-2103 S/R gauntlet but failed. Traders are excited about the central banker pumping for the last two weeks and the BOE is on tap in the morning so perhaps the expectation is that the UK will push off any rate hike announcement into 2016. In addition, lower volatility, higher copper and especially higher oil that gains +4% today, boosting oil, gas and energy stocks and in turn the broad indexes, help to keep stocks buoyant. Auto sales also create a joyous mood.

Note Added 3:25 PM EST:  Looking at the resistance levels above from the SPX S/R missive, 2099-2103 leads to 2110 which then leads to some resistance at 2114, then strong price resistance at 2118, 2121, 2123 and 2126. You can lump these together and call the 2118-2121 as a cluster and then 2123-2126. The HOD is 2116.48 so the 2118 R holds, for now. The upper band on the 2-hour chart above is 2112.73 so price poked strongly up through the  upper deviation band so a move lower to the middle band, now at 2092 and rising, is in play due to the violation. The 2-hour chart remains negatively diverged so same analysis as a bove; the SPX should roll over lower in this 2-hour time frame but the daily chart wants one more price high after any pull back. The SPX is a whisker away from violating the upper standard deviation band on the daily cart now at 2118.47 which will set up a move back down to the middle band, which is also the 20-day MA, at 2046 and rising. The 200-day MA is 2062.46. Price still needs to back kiss the 50-day at 1987 and rising at some point forward. The SPX weekly chart is long and strong across all indicators so that wants a higher high in the weekly time frame after any pull back. The SPX monthly chart remains very uninspired as price nears the record highs all the chart indicators are seriously lagging. Thus, price should pull back in the very short term 2-hour time frame, say into tomorrow maybe Thursday, but then back up to satisfy the long and strong MACD line on the daily chart say to end this week perhaps at the 2118-2126 area, then roll over to the downside for several days or a week or so of downside probably to 2050-2090, then back up going into Thanksgiving to satisfy the long and strong weekly chart, back up to current levels, then roll over for an extended move lower starting in December or as the new year begins.

Note Added 3:37 PM EST:  The price action is great if long but any short positions are getting murdered. Gaps that need filled above are SPX 2120, COMPQ 5202-ish and RUT 1215. The RUT 200-day resistance is at 1216. VIX moves up to 14.50 right now but stocks remain resilient.

Note Added 3:49 PM EST: VIX moves up to 14.61. SPX is at 2109.56 dipping below that strong 2110 resistance which may hold into the closing bell. If price stays under the 2110 support/resistance level, then the SPX will want to retest that strong 2099-2103 support cluster.

Note Added 3:57 PM EST: The SPX peaked at 2:30 PM EST at 2116.48 now at 2108.50 so an eight-handle pull back off the intraday top. The 2117-2121 area represents the closing and intraday high numbers between late February and late April of this year.

Note Added 4:01 PM EST: SPX finishes at 2109.79 still settling out. The bears fight back with all their might to hold the important 2110 resistance. Treasuries sold off today with the 10-year yield up to 2.22% (lower bond price=higher yield). XLE (energy ETF) +2.7%. Chevron throws a party. CVX +3.4%.

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