SPX S&P 500 Daily Chart; Overbot; Upper Band Violation; Negative Divergence Developing

The positive news keeps hitting markets creating upside spikes of joy that the charts must then price-in. The teal lines show that double top that occurred a few days ago. Scroll back to that chart/s where it was discussed. The indicators were negatively diverged as price spiked to that intraday high matching the prior high, so you knew the SPX was out of gas, and selling did occur into this past Monday morning. The Italian referendum vote last Sunday does not result in market carnage, instead, it is another excuse to buy stocks on Monday morning, especially with the ECB printing more QE easy money, and stocks rally this week.

Humorously, the Brexit crash and stock market recovery (purple arrow) took 3 days, the Trump election crash and market recovery (blue arrow; stocks were rallying into the US POTUS election) took 3 hours, the Italian referendum no vote (brown arrow) stock drop and recovery took about 3 minutes and yesterday's ECB rate announcement extending QE through 2017 (gray arrow) created only a tiny 3 second stutter step before another big upside stock market rally occurs. The market euphoria and complacency is rampant. Traders are buying stocks with reckless abandon and total disregard for price.

Yesterday's candlestick is above the upper standard deviation band. That is way out of whack and a mean reversion is desperately needed with the middle band at 2197, and rising, on the table. This is also the 20-day MA at 2197 that needs back kissed. The red lines show neggie d in play for the big up move this week so a spankdown is likely in this daily time frame but note the long and strong RSI and MACD line so price will want to come back up again for a matching or higher high after any pull back that lasts a day, or one or three.

The SPX is not cooked until the RSI and MACD negatively diverge when price makes a matching high. It may need 1 to 4 more days to top out. And the Fed rate decision meeting is on Wednesday and stocks are usually bullish going into the Fed, so this may account for the jog move now through Wednesday that can allow time for the RSI and MACD to go neggie d. The rollover to the downside may be timed with the Fed decision on Wednesday.

Considering the 2-hour chart about to set up with neggie d for all indicators, stocks should top out this morning some time and retreat into the weekend. Of course if a central banker grabs a microphone and promises more easy money, that will create further market joy. The daily chart wants to see price come back up after a day or two of weakness. Maybe stocks are down today and into Monday then rally into the Fed on Wednesday. Then weakness and rollover to the downside. 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.