Sunday, April 3, 2016

SPX S&P 500 Daily Chart Overbot Negative Divergence

The central bankers did a lot of money pumping last month including the BOJ, PBOC, ECB and FOMC. Draghi fired a money bazooka on 3/10/16 and Yellen pumped markets on 3/16/16. The Easter holiday buoyancy and EOQ1 window dressing helps maintain elevated stock prices. The market started to roll over so Yellen hitched up her skirt last Tuesday, winked at traders, and flapped her dovish wings creating more stock market upside. The central bankers are the market.

Remember in the last chart you were watching the RSI to see if it poked above the 70% level and it did not two days ago so it was all systems go for bears but in the Friday orgy rally after the jobs report price makes a new high for the year and the RSI pokes higher. Note that all other indicators remain negatively diverged and would rather see stocks selling off. The bump higher in the RSI will create a jog move, down, then back up for a matching or higher price high, and then the RSI should be neggie d again to open the door for the downside. However, watch the MACD line since if it starts moving higher again with a higher high than two weeks ago, stocks will remain at the highs for several more days before selling off.

During this last two weeks of upside, the volume is at the lowest levels of the entire year. If investors were excited about future upside the volume should be far higher. The market appears to be more of a trading environment rather than investing environment.

The expectation is for a selloff to begin at anytime. Thursday is the new  moon so the back half of the week may be very weak. New money comes into the market to begin the month, especially a new quarter, so this may help the bulls for Monday and Tuesday. After a pullback over the coming days or week or two, stocks will likely come back up again due to the long and strong indicators on the SPX weekly chart but the potential exists for an important stock market top to occur perhaps mid to late April or May with a waterfall crash occurring subsequently. It depends on how the charts progress. 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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