Thursday, June 15, 2017

SPX S&P 500 Daily Chart; Negative Divergence

The SPX daily chart remains buoyant despite the universal negative divergence in place since nine trading days ago. Price closes at a new high at 2440.35 on 6/13/17 . The all-time record high is 2446.20 from 6/9/17. Price now prints the matching high and the indicators remain universally negatively diverged (red lines). The chart wants to see a spank down.

The upper band (pink) was violated nine days ago but price has not yet come back to the middle band, which is also the 20-day MA support, at 2415 and rising, so this remains firmly on the table. The lower band at 2367 is also on the table. Price is elevated above the moving averages so a mean reversion lower is needed.

The blue circles show the numerous gaps that exist on the downside. All those Swiss cheese gaps will need filled at some point going forward. The market bears should be in the driver's seat with a trip down to 2415 very likely, at a minimum. Of course if the central bankers pump markets higher with happy talk or if the Trump administration touts tax reform, less regulations and/or infrastructure spending, this rhetoric can create some additional buoyancy.

The neggie d with the chart indicators wants price to retreat now. In addition, the weekly chart is negatively diverged so the move lower may be a trend for a month or two. As explained in previous charts, a month or two of lower prices may then lead to a month or two recovery in the stock market and at that time, perhaps a July-September window, the stock market may print a multi-year top in price. Another possibility is that this current high that is expected as described above is the multi-year high. Perhaps the 2446.20 may never be seen again for many years. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.