Thursday, January 7, 2016

SPX S&P 500 2-Hour Chart Oversold Falling Wedge Positive Divergence

Since we have been watching the 2-hour chart for a few days it is prudent to keep noting the progress. The search for a near-term market bottom continues waiting for the MACD line to positively diverge--and it has not as yet. Further, with the big selloff at the opening bell, the RSI slipped more negative resuming a weak and bleak posture (compare the chart above to the previous 2-hour charts to note the progress of the candlesticks as time proceeds).

The RSI has arleady rectified the weakness and bleakness with positive divergence so that is back in the bull camp wanting a bounce in price again. Ditto the other indicators except for the pesky MACD line and note the MACD weakened in the one-month time frame. The bulls need that MACD line to curl higher as price prints a new low; that will signal the all-clear for an upside rally. The new candlestick started at 11:30 AM so the next will candle will start at 1:30 PM and then 3:30 PM. At least a couple candlesticks are likely needed for price to make matching or lower lows while the MACD curls upwards, thus, a market bottom may occur anytime today for stocks, or tomorrow morning. The Monthly Jobs Report is tomorrow morning which throws another wrench in the works since stock may react violently one way or the other depending on the wage data.

Stocks rallied after the opening bell after the initial flush since China has suspended the circuit breaker rules that have created two closures in Chinese markets this week in four days. The PBOC may provide more go-juice stimulus tonight which would firmly begin a global rally. Remember, the central bankers are the market.

Sticking to the stock chart, the SPX should bottom say anytime before the closing bell and begin a relief rally. The MACD must positively diverge to create the bottom. If the PBOC announces more stimulus, nothing else will matter, the central banker will save the day once again, and stocks will catapult higher.

The stock action is interesting to watch. If China crashes again tonight and the SSEC loses the 3K level, worries will increase over a potential crash in the US. If UTIL loses 572, stocks will likely crash; price is at 578 currently. The reason US stocks did not crash after the opening bell this morning is because utilities did not break down under UTIL 572. 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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