Sunday, April 3, 2016

SPX S&P 500 Weekly Chart

The previous daily chart is setting up with negative divergence so downside is coming in the daily time frame, however, note the long and strong indicators on the weekly so price will likely come back up again after any near-term selloff. The stochastics are overbot which verifies the weakness on the daily chart and should help create a pull back.

Thus, the weekly chart may need to see price jog down, then up, then down, then up, then at that time the indicators may line up universally with negative divergence to mark the top. If each move occurs for one week then that would be about 3 to 6 weeks time for the weekly chart to identify a top. Of course a big negative geopolitical news event could flush things lower at any time. So the daily says down but the weekly wants to see some more up. That equates to a selloff in the days or week or two ahead, then prices should recover back to current highs, then check the indicators above which will likely be forming negative divergence. You have to wait for all the ducks to line up with neggie d, say later this month or in May and that will mark a significant top.

Of important interest is the tight standard deviation bands on the SPX monthly chart. They are squeezing in tight and are about to create a huge and drastic market move on a monthly basis. Tight band squeezes do not dictate direction only large magnitude. However, the market bears have been waiting a long time for the stock market to roll over in a meaningful way and that may be coming starting later this month or May. The ominous multi-year rising wedge pattern on the monthly chart has not yet extracted its pound of flesh. The collapses from rising wedges are typically very dramatic and damaging. 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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