Tuesday, December 29, 2015

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

The bulls punched the bears in the face today (Tuesday, 12/29/15) with a big upside rally the major indexes gaining over +1%. However, the CPCE and CPC put/call ratios collapse lower printing low numbers indicating complacency and a near-term market top at hand. If a market top is in the cards, a look at the SPX 2-hour chart may provide more insight into the potential for a top, or, dispel the idea.

On the 2-hour, the red rising wedge, overbot stochastics and money flow, and negative divergence for the histogram, stochastics and money flow (red lines), all indicate a bearish path ahead. Price will be spanked lower, however, the RSI and MACD line remain long and strong (green lines) so price will want to come back up for another high. The RSI has to be watched as well to see if it wants to move into the overbot zone. When price comes back up after the initial sell off in this 2-hour time frame, the RSI and MACD line will likely turn neggie d and send stocks down for a more sustainable move lower.

So the 2-hour chart does corroborate the low put/call ratios. The SPX needs from 1 to 3 candlesticks to roll over which is 2 to 6 hours of trading time which represents all of tomorrow's (Wednesday) trade. Thus, a guess would be that the market tops either tomorrow afternoon or on Thursday, New year's Eve. Rallies can be shorted.

Important S/R is shown by the brown lines; 2102-2103, 2093-2094, 2089, 2084, 2081, 2079, 2071, 2067, 2061 and 2046. 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 Friday, 1/1/16: Markets are closed for New Year's. The SPX rolls over to the downside as described above closing the year at 2044 down 15 points during 2015 after all that drama week after week. The MACD line was moving higher by a hair for the candlestick after the price high so technically, the bears would have been better off to see price come up to 2080-ish on Friday and then roll over, however, the neggie d from the other indicators and the low CPCE and CPC put/call ratios conspired to spank price lower. The 12-month MA at 2053 is the key level in the entire stock market. Bulls win for the short, intermediate and long term if the SPX is above 2053. Bears win for the days, weeks and months ahead if the SPX remains  under 2053. The new year begins at SPX 2044. Comically, all the Wall Street analysts are already calling for a winning year with targets from SPX 2100 to 2350. Everyone of these Einstein's called for higher markets in 2015 and every one of them  was wrong. Keystone called for a negative year and was correct. The 18-year stock cycle is in play with a secular bear market 2000 through 2018 (is is very common to have strong cyclical bull patterns like 2003-2007 and 2009-2015 inside the secular bear) so as Keystone has mentioned over the last couple years, it would not be surprising to see 3 of the next 4 years negative for stocks; we just got one.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.