Sunday, July 23, 2017

SPX S&P 500 Daily Chart; Upward-Sloping Channel; Overbot; Negative Divergence; Upper Band Violation; Price Extended

The S&P 500 daily chart shows the upward-sloping channel in play with price bumping its head against the upper rail. The red lines show the negative divergence in play that wants to see a spankdown. The short green lines show some VST juice that may create another jog move (up one day then down) but the overall neggie d should create weakness going forward. The stoch's are overbot agreeable to a pull back.

Price has violated the upper standard deviation band so a move back to the middle band at 2441 is in play and even the lower band at 2403. Price is extended above the moving averages needing a mean reversion lower. Note the distribution taking place (brown circles) as price moves higher one day, the institutions are selling out of long positions the next day, taking advantage of the happy mood, creating larger selling volume. The smart money is passing off shares to Joe Sixpack, the sucka, that is caught up in the television hype and buying the shares the institutions are unloading. Every top needs a sucka.

The low CPC and CPCE put/calls say a near-term top is at hand; this jives with the chart above that is agreeable to downside ahead in the daily time frame. The bulls can extend the upside stock market joy a few more days if they can keep that MACD line moving higher. The expectation is for the SPX to roll over in the days ahead. Perhaps the NYMO, McClellan Oscillator, will finally move lower into deep negative numbers that have not been seen for months.

The historic low VIX and low put/call ratios verify the rampant complacency in the market right now. No one cares if stocks sell off since they will buy the dip. If stocks sell off a lot, all the better, because everyone knows the Federal Reserve will step in and save the stock market as it has every time since March 2009. The central bankers have created a sick world.

The new moon peaked yesterday and stocks are typically weak through the new moon, however, stocks are usually bullish into the FOMC meeting which is Tuesday-Wednesday. Stocks have rallied strongly in July so typically prices would be expected to be soft to finish the month. The EOM is Monday, 7/31/17, so there are six trading days remaining in July with the bulls on track for another winning month. 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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