Thursday, December 8, 2016

SPX S&P 500 2-Hour Chart

The 2-hour chart has been an interesting chart to watch over the last couple weeks. The negative divergence, rising wedge pattern, and overbot conditions conspire to create a spankdown in price but the positive news bites prohibit any significant pull back. The Trump  Rally began the week of the presidential elections, 11/7/16, and ran higher like a banshee  into the top three weeks later. The pull back is minimal and this week stocks go parabolic due to the ECB offering more stimulus which they confirmed today. In addition, the Italian referendum no vote was no biggie and the Italian banks will receive bailouts. The bulls are wearing rose-colored glasses as they dance and sing inebriated from the ECB wine.

The contrarian indicators such as low VIX, low CPCE put/cal, high NYMO and so forth favor a pull back in stocks. The positive news bites hit the charts suddenly so there is always a little time required to build the new information into the price and indicators. The SPX is violating the upper standard deviation band for the last few candlesticks so a move to the middle band at 2212 is on the table as well as the lower band at 2176 with both lines rising.

Price makes a higher high and the stochastics and ROC indicators are neggie d with stoch's overbot so a spankdown is needed in this 2-hour time frame, however, the RSI is a smidge higher and the MACD continues higher long and strong. Thus, after a small pull back, price will want to make another matching or higher high in price and then, if the MACD line goes neggie d, should roll over to the downside and a sell off will begin in stocks. So a little down-up-down jog move is likely over the next few hours. Thus, 1 to 5 hours are likely needed to top stocks out. This places trading into this afternoon or tomorrow morning for a top to occur.

The bulls are going to try and jam the bullish euphoria into the weekend to keep the party going. When the RSI and MACD line turn neggie d with the new price high, that will tell you the top is in. 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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