Tuesday, September 6, 2016

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

On the one-hour chart, the SPX has threatened to violate the 200 EMA at 2170 over the last couple weeks but the central bankers keep finding a way to pump happiness into stocks. The gap up move last Friday after the jobs report creates the island that price is currently on in this one-hour time frame (brown lines). If price falls to 2175 and then gaps lower to 2170 and below, that would be an island reversal pattern. Otherwise, price may simply move lower and fill the 2170-2175 gap.

Price violated the upper standard deviation band so a move to the middle band at 2172, at a minimum, is on the table. Price prints a matching high on Friday but the RSI, histogram and stochastics went neggie d wanting a spank down in price. A spank down occurs to begin the week. The green lines, however, show long and strong behavior remaining in the MACD line and ROC hinting at another higher high or matching high for price. Note how the prices match from Friday to today (the last two candlesticks) on the close and open basis and the stochastics are flat (neggie d) and ROC neggie d (a hint of bearishness). The door has to be left open, however, for another move higher in this one-hour time frame but you will know if it is meant to be over the next hour or two of trading.

Price has lower targets at 2175, the 2172 middle standard deviation band and the 2169-2171 support gauntlet (reference the previous article displaying the SPX S/R).  If 2169-2170 is lost, stocks will be falling like a stone. If the SPX remains above the 200 EMA at 2170, the bulls remain in control of the stock market for the hours and days ahead. 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 10:30 AM EST: Here you go. The SPX drops to 2175 contemplating if an island reversal is in the offing. Note that the 2175 is extremely strong support as shown in the SPX S/R article, so its failure would set up the test for the critical 2169-2171 level. Price bounces to 2177 so the first test of support results in a slight recovery. Price will likely test the 2175 again.

Note Added 9 AM EST on Wednesday, 9/7/16: The long and strong indicators pulled price higher as yesterday progressed; then a wild buying frenzy occurs into the closing bell. The SPX is at 2186.48 taking out the critical overhead resistance at 2183-2185. From noon into the final minutes of trading the SPX was in the tight 2182-2184 range. Looking at the one-hour chart now, indicators are neggie d except for the MACD line, and stochastics but stoch's are in overbot territory and will want to see a retreat in price. So a couple more candlesticks will be needed to try and turn the MACD line into negative divergence so an hour or two of trading time. Looking at the 2-hour chart, it hints at a bit more lift (2 to 6 hours) so stocks may remain elevated for much of today (Wednesday). With the ECB on tap in the morning and Draghi press conference, markets may sit idle and wait for the words of wisdom from central bankers. The CPCE put/call indicates rampant complacency continuing and a market top likely. SPX 2187 is very strong resistance so keep an eye on that number; bears will need to hold the line.

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