Thursday, June 2, 2016

SPX S&P 500 Weekly Chart

The bulls are keeping stocks elevated with central banker jawboning, higher oil prices and lower volatility. The weekly chart was on tap to make higher highs, which continues to occur, so it is a good time to take a look at the progress in the weekly time frame. The red lines clearly show the negative divergence in play. The stochastics are overbot. These indications should create a smack down in price but note the long and strong MACD line. The MACD line wants another matching or higher high in price after the pull back occurs.

Thus, stocks will likely sell off next week, but then recover, say the week after (6/13/16) which is the Fed decision on 6/15/16. At that time with the higher high in price, the MACD has to be assessed to see if it turns neggie, if so, then the top is in and prices begin trailing lower say from mid-June forward. After the near term selloff say through next week, when price comes back up, if the higher price creates a higher high in the RSI, or MACD, then the bulls are going to spend a few weeks in charge.

The hanging man candlestick forecasts a potential trend change ahead. The brown circles show distribution taking place in the markets. The selling volumes are higher the day after a market up day representing excited retail traders like Ma and Pa Kettle, Joe Sixpack and Aunt Edna, buying stock off the institutions that are distributing their shares. Lots of drama is ahead with Fed and other central bank shenanigans, oil volatility, the Brexit vote and Spanish elections on tap over the next three weeks. The sick European banks must be bailed out. China is shaky and Japan may be sliding down the rabbit hole. 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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