Friday, March 17, 2017

SPX S&P 500 Daily Chart; Tight Bands; Sideways Symmetrical Triangle

The dark red lines show the prior top on the daily chart. The negative divergence with the MACD line, histogram, stochastics and money flow, and overbot RSI and Stoch's all pointed to a down in price, which occurs, but that RSI printed a tiny peak so this long and strong sliver of strength wanted price to come back up again, which it is doing now. Price is not yet matching the prior high as shown by the thick red line so negative divergence cannot yet exist, but the thin red lines in the right margin for the indicators clearly show each one sloping lower and lagging. If price would make a matching or higher high at 2400-ish, chances are all the indicators will be neggie d forecasting a move lower that will be sustainable on the daily basis.

A sideways triangle is in play and a breakout above 2182-2183 opens the door to 2432 while a drop below 2368 forecasts a drop to 2318. The SPX is printing above 2183 as this message is typed so the bulls have the bears in the corner and are giving them the ole one-two.

The tight bands forecast a big move on tap any day forward that will probably create a move of 30 or 40 handles or more. Tight bands do not forecast direction. The pink boxes show a strong upside trend in December but this petered out. However, this month, the strong trend shown by the elevated ADX reestablished itself. Market bulls need the ADX to curl upwards again while market bears need the ADX to start dropping to stop the strong uptrend.

It may be reasonable to expect that price will come up to touch the upper band at 2392 and from there either become squeezed strongly higher, or, forced lower by the band squeeze. Coming up to 2392-2400 may be good enough to satisfy that RSI strength from 13 days ago. With the indicators staying under the thin red lines, the bears would be favored going forward but the door remains open for 2384-2393 over the next day or two. Price remains above the moving averages and continues to need a mean reversion lower. 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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