Tuesday, February 21, 2017

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

Traders are salivating over President Trump's tax reform package that was promised any day. Market participants expect a brand new shiny pony so the orange-headed leader will have to deliver.

The S&P 500 daily chart has a rising wedge pattern in play which is bearish. Price is at the top rails with today's euphoric joy. Look at the astounding move with price riding that upper standard deviation band for the last eight days! Since the upper band is violated, the middle band at 2308, and rising, is in play as well as the lower band at 2255 depending on how price react when it comes back to kiss the middle band which is also the 20-day MA at 2308 and rising.

Price is above the 20-day MA above the 50-day MA above the 100 above the 150 above the 200 so a mean reversion lower is needed. The red lines show neggie d wanting the top to be in for price but the RSI is long and strong. Ditto the MACD line although it is negatively diverged over t he last three months. The red lines will create a pull back in this daily time frame but after a day or few, price will want to come back up to satisfy the RSI. The RSI and stochastics are overbot and greatly elevated so the upside cannot last much longer.

So price will likely top out and retreat but want to come back up perhaps for a top as this week ends. As soon as the RSI displays neggie d when price comes up for the mathcing high, the SPX will be cooked inthe dialy time frame. The new moon peaks on Sunday and stocks are typically weak moving through the new moon so that would be say from Thursday or Friday through Monday or Tuesday.

Equities rallied strong so far this month. When this behavior happens, the month usually ends on a down note. The month ends on Tuesday, 2/28/17, only five days away. The RSI will tell you when the chart above is cooked. 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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