SPX S&P 500 Weekly Chart; Overbot; Negative Divergence; Upper Band Violation; Price Extended

The SPX weekly chart is set up for a pull back. The RSI and stochastics are overbot and agreeable to a move lower in this weekly time frame. The red lines show negative divergence across all indicators so the move higher is running out of gas and set up for a spankdown. Note the volume last week one-half the average weekly volume. Markets were closed on Thursday for Thanksgiving and closed early Friday but the new stock market record highs, with the SPX closing above 2600 for the first time in history, occurs on vapor volume.

The maroon lines show the top Keystone called in the summer. As usual, however, once stocks wanted to move lower, the central bankers step in to save the day. The ECB and BOJ remain very accomodative so stocks float higher. The world is awash in central banker liquidity sending all asset classes to bubblicious highs. It is interesting that from a technical perspective, there was no reason for the stock market to recover that quickly in the late summer--except for central bankers.

The upper band was violated so the middle band, the 20-week MA, at 2513 is on the table. Price is extended above the moving averages requiring a mean reversion at some point forward.

The ADX leaps higher to 38 indicating that the weekly uptrend in the S&P 500 is a very strong trend higher (pink box). When the stock market softened after the May 2015 top, that Keystone called back then, equities trended lower with lower lows and lower highs. The Fed and other central banks panicked in early 2016 and stepped in to save the day with liquidity again. That created the Tweezer Bottom (blue circle). The central bankers are the market.

The SPX daily and weekly charts are set up for a pull back so if you were contemplating on trimming positions, don't wait any longer. The SPX monthly chart is setting up with neggie d, as has been the case this year, but the RSI keeps running higher wanting to create more monthly highs in price. This RSI  may retreat over the next four days since the EOM is Thursday. This week is shaping up to be immensely important on how the year ends. Tax loss selling typically hits a peak the first week of December so if the bears can begin the down move in equities it may carry through into mid-December.

The expectation is for the stock market to pull back on the daily and weekly basis. Market bears, howerver, cannot expect any extended downside in the stock market until the ADX above drops below 28-ish, the RSI on the monthly chart goes neggie d and also for the utilities sector to roll over. The neggie d on the weekly chart above indicates that there is more of a likelihood that stocks will finish the year weak.

The monthly chart indicates that stocks will come up for another record high after the selloff. The best Christmas present the market bears can receive is for stocks to sell off on Monday through Thursday to end the month weak since this may bring the RSI on the monthly chart lower and usher in the multi-year top in the stock market sooner rather than say, 2 to 4 months out. The monthly charts receive final data points at 4 PM EST Thursday, 11/30/17.

Of course, any additional happy dovish talk from central bankers or from President Trump can create a temporary further boost in prices before the downside in the near-term begins. All things staying status quo, equities should begin rolling over this week and create at least 2 or 3 weeks of soggy stock market prices ahead. 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.