SPX S&P 500 2-Hour Chart

The SPX 2-hour chart has been dishing out drama over the last couple weeks. Price is news-driven lately with central banker dovishness continuing and the tax-cut talk is also maintaining buoyancy in stocks. Price recovers but not due to positive divergence. Traders know that equities are bullish about 80% of the time into the Fed meetings and keep front running this seasonality more and more over the last few months.

The maroon lines show the negative divergence spankdown off the top but note that the MACD line squeezes out a tiny higher high. The MACD tells you that the SPX will likely come back up after a pull back and this occurs with price now back up in the neighborhood of the highs from last week.

The red lines show negative divergence wanting a spankdown to occur. However, the RSI and MACD line continue moving higher trying to keep the upside party going for a couple or few more candlesticks. Watch the RSI to see if it takes out the prior high that occurred when price made its high early last week (purple circle). The top is in if the RSI does not move above the prior high in the purple circle. If the RSI sneaks out a higher high, it will take a couple more candlesticks (each candle is 2 hours of trading time) for price to set up with negative divergence and identify the top.

Even with Yellen professing dovishness on Wednesday afternoon (tomorrow), the top should be in at this 2660-2670 level but the FOMC drama will have to play out this week. 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.