Sunday, July 10, 2016

SPX (S&P 500) Daily Chart Expansion (Megaphone) Pattern

The SPX is printing an expansion pattern as shown by the red lines. This is also called a megaphone pattern and the handle is drawn for the megaphone to create the depiction. Price runs up towards the top trend line at 2130-2140. The upper standard deviation line is 2137. The all-time record closing high is 2131 and all-time intraday high 2135.

The red lines for the indicators show negative divergence in play over the last few months but the short green lines show a near-term long and strong rally. The MACD cross turns positive. The stochastics are in overbot territory. Money flow is stalled. The thought (guess) would be that price prints the new record highs in the 2135-2145 range sometime this week but then retreats sharply lower. The bottom target line of the megaphone pattern is 1975-2000 in August.

The two large selling volume candles need retested so price will likely retreat to between the two thin blue lines. At that time the bulls need to show that within that same price range they can print strong bullish volume numbers to prove that stocks have lots of upside ahead. Price is elevated above the 20-day MA above the 50-day above the 200 so a mean reversion lower favors the bears. The 2130-2150 range will be very interesting this week. 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 on Monday Morning, 7/11/16, at 10:41 AM EST. The SPX prints a new all-time record high at 2139.34.

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