Wednesday, January 18, 2017

SPX S&P 500 Daily Chart; Overbot; Negative Divergence; Rising Wedge

The new year is underway and the end-of-year stuff is out of the way. The markets in late December early January are typically higher due to seasonality effects and the Santa Claus rally. The trading volume is low so the choppy and sometimes odd behavior is a good time to take it easy and sip some eggnog and partake in some figgy pudding. Well, the party is now over and it is time to get back at it.

The SPX daily chart shows the standard deviation bands squeezing in tight so a big move is at hand. Tight bands, however, do not predict direction. Back in late August early September the tight bands squeezed out a downside move.

The ADX is interesting since it was elevated confirming the strong downtrend in October, and then the spike higher on the Trump election in early November catapulted price so high so quick that the ADX remained elevated to confirm that the upward move in price to end the year and into this new year was a strong upward trend. Until now. The ADX drops below the pink box so there is no longer a strong uptrend in play for the SPX price in the daily time frame.

The red lines show neggie d and a spankdown occurs the last three days of the year (by the way when a month is solidly up like December was, you usually see it finish weak the last few days and December was textbook) but a larger spankdown would have been expected and is expected. A wild card for tomorrow is the ECB and President Draghi press conference. He may pump markets with more QE stimulus talk. His words will directly impact the euro which moves the US dollar index which will move US stocks.

The chart is bearish in this daily time frame due to the neggie d, rising wedge and overbot stoch's. If the central bankers pump stocks higher tomorrow, the SPX may target the upper band at 2284, if so check to see if the neggie d remains in play for the indicators, which it probably will (negatively-sloping red lines), which would identify that as the top. If price begins moving lower right away, the lower band at 2246 is a target. 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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