Monday, January 30, 2017

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

There is a lot going on in the spaghetti above. The red lines show the rising wedge pattern in place; price has  moved into the apex of the rising wedge. The red lines for the indicators are negatively diverged wanting to see a spank down. Stochastics are overbot. RSI is not overbot but was six weeks ago as the rally was in full force. All of this is bearish.

The ADX had called the rally move in November and December a strong uptrend (pink box) but two weeks ago the ADX loses the strong trend status. Price may be printing new highs but the rally is NOT in a strong uptrend any longer. Bulls will  need the ADX to jump up to +28 and higher again.

The pink arrows show the tight band squeeze that popped price skyward. Tight bands do not predict direction they only tell you that a big move will occur, and the bulls won again. The SPX has violated the upper band (pink) so a move back to the middle band, which is also the 20-day MA, at 2272, and rising, is in play.

Marrying the above with the SPX support/resistance information in the prior post, the 2292 level, last Friday's low, is the first test of support. The SPX begins the week at 2295. S&P futures are weak overnight and down -6 a couple hours before the opening bell for the new week of trading. The 2292 rupture will send price to 2289 immediately, then a test of 2285 would be next. If that fails 2282 support is next and then a gauntlet of strong support at 2277-2279. It would be a big deal if 2277-2279 fails; this would be a logical place for a bounce to occur so if it does not, price will collapse to the 2271-2275 level which envelopes the middle standard deviation band and 20-day MA at 2272 and rising. The SPX likely has a date with 2272-2275 this week where price would make a bounce or die decision. 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 8:27 PM EST Monday Evening: The SPX sells off today but recovers into the closing bell ending at 2281. The LOD is 2268. The test of 2272-2275 came quickly and price bounced and then ended the day at that 2282 S/R level. If you look back at the SPX Support/Resistance missive, you see the support at 2268-2269 and that is exactly where price bounced from. This level now carries more clout going forward. The key short-term signal is the 200 EMA on the SPX 60-minute chart at 2264-2265. Market bulls are not worried since this critical 2264-2265 held. Also, the VIX bounced but at 11.88 remains below the critical 200-day MA at 14.06 an important market direction signal. Bulls have their feet up on the desk and are smoking expensive Cuban cigars, dabbing the ashes into the faces of huddled masses, while sipping Fed wine and ECB champagne. Bulls will panic if SPX loses 2264 and VIX moves above 14 since stocks will be collapsing. Until then, the bulls are drinking and singing without a care in the world; the hula girls are swaying.

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