Sunday, November 20, 2016

SPX S&P 500 Daily Chart

The SPX meanders along with the non-stop support of global central bankers. The Trump election win creates more stock market upside with the RUT (Russell 2000 small caps), INDU and DJI (Dow Jones Industrials) and COMPQ (Nasdaq Composite) printing new all-time record highs and the S&P 500 is only a whisker away. The all-time record high for SPX is 2193.81 and all-time closing high is 2190.15 from 8/15/16 (green circle). The SPX begins the new week at 2182. The SPX HOD on Friday is 2189.89 only 26 pennies from a potential new record closing high but the bulls could not find that quarter under the Fed's couch cushions.

The daily chart displays the two-week stock market rally. Price jumps from 2084 to 2190, +5.1%, in 10 days time. The rally began Monday, 11/7/16, going into the election on 11/8/16 and then took off like a rocket after 11/9/16; the Trump Rally. The put/call ratios were uber high signaling panic and fear so it made sense for the rally to begin on 11/7/16. The CPCE put/call has printed uber low readings so a stock market top should be on tap at anytime. Note the solid downward-sloping red channel in play with price at the top rail when Trump won the election causing the breakout higher and price jumped above the 50-day MA at 2146 never looking back.

The red lines show negative divergence over the four-month time frame and neggie d over the last couple days with the RSI, histogram and stochastics as price makes new highs. The stoch's are overbot wanting to see a pull back in the daily time frame. These indicators are all bearish. The MACD line and money flow remain bull-friendly and long and strong over the last few days wanting to see another high in price after a pull back occurs in this daily time frame.

The direction ahead is a tricky call since if price starts to print above 2190 and 2194, the algo's may click into high gear and run price above 2200 in a heartbeat. The chart suggests that stocks will sell off for a day or two, then rally again for a day or two printing new highs which will be at the new all-time record highs. At this time, as long as the indicator lines do not move higher than the highs shown over the last couple days, the bears are in business and the SPX should roll over to the downside.  If, say, the RSI prints a higher high than a couple days ago, SPX 2200+ is on the way.

The thinking is that price will not breakout with a strong upside move and the 2190-2195 area should hold in the days ahead but in these markets anything can happen. The weekly and monthly charts are unenthusiastic for upside. Price tagged the upper standard deviation band in the chart so the middle band, also the 20-day MA, at 2143, and rising, is in play.

The projected day or two down move and then day or two recovery would line up perfectly with seasonality factors since stocks are typically buoyant into the Thanksgiving holiday and the shortened Friday session is typically an up day. Thus, Monday and Tuesday may be soggy for stocks with higher prices coming on Wednesday and Friday. It will be interesting to see if new highs can print in the week ahead. Will the Trump Rally continue? 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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