Wednesday, August 3, 2016

SPX (S&P 500) 60-Minute Chart 200 EMA Cross

The red lines show the price climbing as the indicators sloping lower, negative divergence, so a spankdown is on tap and voila, it appears. The brown lines highlight the gap between 2153 and 2159. An island reversal pattern does not occur since price did not gap back down through the gap, instead price simply moved lower to fill the gap.

Stocks bounce off the bottom but the indicators are not enthusiastic. Stochastics are oversold which helps create the bounce. RSI, however, never printed in oversold territory. The MACD line is weak and bleak as price bottomed hinting that more downside is preferred.

The stock market is wrestling with the BOE decision tomorrow where Governor Carney is expected to announce shock and awe stimulus so stocks may be buoyant even if much of it is already priced-in. This may have helped create the bounce over the last couple hours. The US Monthly Jobs Report is on Friday morning so the end of the week may be a roller coaster ride.

The bottom standard deviation band is violated so the middle band at 2166 and dropping is in play (pink). The key 200 EMA is 2139 signaling bullish markets for the hours and days ahead as long as price remains above. Bears got nothing unless they push the SPX under 2139. Under 2139 and market selling will become more substantive.

So price may visit 2139 today and bounce into and through the BOE announcement to the 2166 level, or visa versa, recovering today to the 2166, into the BOE news tomorrow and then perhaps rolling over again to the 2139 late Friday or early next week.

The previous daily chart shows the neggie d smack down on the daily basis so more weakness would be expected in the daily time frame. The 20-day MA is 2156 so price will either bounce or die from here at the opening bell. Bears need to take out yesterday's low if they want to gather strength, that is 2148. Price may want to back kiss that critical 2159-ish level. 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 Monday Morning, 8/8/16, at 8:54 AM EST: About one-half hour before the opening bell to begin the new trading week, futures are floating higher. Stocks rallied strongly last week. The BOE decision on Thursday and jobs report on Friday turned any mild gloom into joy. Charts can only price in what they know up to the minute so they are adjusting for the new promises of more central banker stimulus. Price tags the middle band and gaps up from there and catapults to the upper band at 2187 now. The SPX violated the upper band on Friday's trade with four candlesticks above the upper band. Thus, the middle band is back in play again which is at 2167 and rising slightly. The 1-hour chart is negatively diverged across all indicators except the MACD line so the chart wants at least one more high after a minor dip in this one-hour time frame. The 2-hour chart displays that ongoing tight standard deviation range, a tunnel, and atypically, has not yet broken sharply lower or higher as would be expected. There was a move down early last week followed by the move higher late week. Price is near the top band on the 2-hour chart at 2185 which would place its middle band at 2166 in play. The stochastics are overbot on the 2-hour chart so a pull back rest is needed but other indicators are long and strong. Thus, there are likely another day or so of flat or higher moves in the stock market ahead unless negative news hits.

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