Wednesday, February 15, 2017

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

The red rising wedge is an ominous pattern on the S&P 500 daily chart. The collapses from rising wedges can be quite dramatic and the CPC and CPCE put/calls indicate that a market top is at hand likely this week. The red lines show universal negative divergence across the three month time frame. RSI and Stochastics are overbot. These are all bearish indications.

The RSI and MACD are trying to squeeze out some more juice. The banks have rocketed higher after the Trump administration pledges to slash financial regulations. The banks carry the broad indexes higher. Traders are buying stocks with reckless abandon.

Price violates the upper standard deviation band so the middle band at 2291 and rising is in play. The SPX should retreat off that upper rail and perhaps test the lower rail of the wedge at 2320-ish. Price may  bounce there and try and stay inside the wedge but then should fail. Once price fails below the red trend line of the wedge it will then come back up to test the underside of the bottom trend line and then likely fail setting its sights on the middle band at 2291 and rising and even the lower band at 2253 that is moving sideways.

Price is extended way above the moving averages needing a mean reversion. A pull back is at hand unless there is positive news from President Trump that further pumps stocks higher for a couple more days. 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 7 AM EST on Thursday Morning: The SPX prints new record highs again. President Trump touted tax reform which creates big upside in banks and stocks yesterday. The RSI on the daily chart is now a higher high than December so a jog move is likely needed before the chart rolls over such as down today, perhaps up Friday, then the roll over off the top going forward. The bull party keeps hanging on from happy talk from the Federal Reserve and the president.

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