Friday, January 8, 2016

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

The SPX 2-hour chart is fun to watch over the last three days. The MACD line continues to tell long traders to wait until you see the whites of their eyes before firing. Note the MACD liine is finally leveling off, however, waiting for indicators to universally diverge can sometimes be like herding kittens. The money flow now leaks lower to a weak and bleak posture. A couple more candlesticks are needed before the indicators can line up with universal possie d but the chart is so close to launching the long side you can taste it.

The expectation is that a recovery rally, that may be quite strong, will begin at anytime either before the closing bell today or on Monday morning. Traders may wait to see if any geopolitical events occur on the weekend and if not, begin a robust rally. There has to be pent-up long demand since new money comes into the market to begin the year and this has not been put to work yet and there are a lot of shorts in the market that would create a short-covering rally.

The NYMO McClellan Oscillator (see previous chart) says a market bottom is at hand with a -57 reading; check this after the bell to see if an even lower reading occurs which would lock in a market bottom more firmly. The VIX is elevated showing elevated levels of fear and worry conducive to a bottom. The CPC and CPCE put/call ratios popped higher showing that fear and panic is beginning to show in some trader's faces. These indications gel with the technical analysis on the 2-hour chart above reinforcing the expectation that a near-term market bottom is at hand and a strong bounce should occur for stocks at any time.

The new moon is tomorrow and stocks are typically weak moving through the new moon. This may be accounting for some of the weakness today where the bulls are unable to get anything going as yet.

Price has violated the lower pink standard deviation band so the middle band at 1982 and falling is in play. The only thing that can stop the rally that is about to start is a negative news event over the weekend. 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 4:23 PM EST:  The flush lower into the close is surprising. The SPX is down 21 points, -1.1%, to 1922, and pukes -6% this week. The market bears came to play this week and are growling strongly. The strong support/resistance is 1942, 1937, 1936, 1928, 1924, 1920, 1912, 1910, 1897 and 1891. Price fell through the uber strong 1924 support but the 1920 support held. LOD is 1918. Bulls will need price immediately above 1924 at Monday's opening bell, otherwise, price will seek 1897. The NYMO, CPC and CPCE charts will be interesting tonight. The pesky MACD line keeps moving lower so 1 to 3 candlesticks are needed which means the stock market should bottom on Monday. Keystone bot SSO opening a new long position.

Note Added 4:34 PM EST: The NYMO just printed at -66 deep in negative territory so a market bottom is expected at any time.

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