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

The 2-hour chart shows the bottom printing with the positive divergence green lines. The red lines show negative slopes for the indicators but not negative divergence since price did not print a matching or higher high as compared to 5 or 6 candlesticks ago (10 or 12 trading hours ago). You can get cute and say the spike high late yesterday is almost a matching high but chances are, price may want to come back up to that thin red line and the blue line that is price resistance from late April. This would actually be great for bears, as long as the red lines all remain sloping down, which would then be neggie d, and a spankdown would begin in this 2-hour time frame.

Price has violated the upper standard deviation band so a move to the middle band at 2071 and rising is on the table and also the lower band at 2037 and rising. Thus, price may soften and move towards the middle band now, or, price will top out today to tap that thin red price line, and then, if neggie d is in place as shown by the red lines, price will begin lower. After today, markets will be closed until Tuesday so the bears may have to wait for Tuesday or Wednesday to receive something they can sink their teeth into.

Note the neon blue bull flag. That ran from 2028 to 2058, 30 points, then sideways consolidation while drifting lower to form the flag, this behavior is textbook, then when price starts to move higher again from 2048 for the second leg of the pattern, you know the target is 2078, which occurs. Price gaps up from there and is now sitting on an island above 2080. If price retreats to 2080, then immediately falls back down through the gap to 2076 and lower, that would be an island reversal pattern. Price may also simply choose to retreat and fill the gap at 2076-2080.

The 2-hour indicates that price will likely top out today perhaps this morning in th is 2-hour time frame. Stocks are typically bullish the two days in front of a three-day holiday weekend but have already rallied big this week. Markets will become more dicey with each day forward as the march to June and the Jobs Report, Fed rate decision, Brexit vote and Spain elections begins. The CPCE put/call is down to 0.55 indicating rampant complacency so a near-term top is at hand at anytime. 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 10:53 AM EST: About 90 minutes into Friday trading, the SPX is up 5 points to 2095. HOD 2096.16. So price seeks that thin red line and blue line as explained and highlighted in the chart above. Now that price is at a higher high than 6 or 7 candlesticks ago (12 to 14 trading hours ago), check the indicators to see if they are all negatively diverged, or not. All are neggie d except for the MACD line that has a hair of upside slope to it. The RSI is flat this can be considered negatively diverged. So the MACD may want one more jog move in this 2-hour time frame, which would be a down move then back up then roll over. So, marrying this behavior with the low CPCE put/call, a near-term stock market top is likely right now, say now through the next four hours which says perhaps by the closing bell the top will be in place for stocks in this two-hour time frame. This opens the door to weekend drama since, based on technical's, stocks will sell off to begin next week on Tuesday, however, if there is a positive news event, that may create lift to stocks to begin next week temporarily negating the technical's. Of course a negative news event on the holiday weekend would tank stocks with extra juice (due to the technical's) come Tuesday.