SPX S&P 500 Daily Chart; Overbot; Negative Divergence; Upper Band Violation; Powell Rally

The day before the Powell Rally, the maroon lines show universal negative divergence in play with overbot RSI and stochastics and a rising wedge pattern all portending downside. As Keystone always states, however, in these manipulated markets, the only thing that can nullify the chart and create more upside is central banker joy. Jerome Powell, the next Federal Reserve chairman that will take over from Chair Yellen, appeared for his confirmation hearing in front of the Senate Banking Committee on 11/28/17 and hit the ball out of the park. Stocks became orgasmic celebrating the new Fed head. He had all the right answers and plans to continue Yellen's dovishness.

The tax-cut bill continues making progress through Congress creating further upside so the chart has to adjust for these joyous real-time events.The red line shows the higher high in price on Monday morning, 12/4/17, but the red candlestick shows that price collapsed as the day played out; it was a bull trap.

With the new all-time high for the S&P 500 at 2665.19 on 12/4/17, the indicators are negatively diverged. The MACD line is neggie d over the last two months but note the short green line that was trying to create a higher high. This little bit of juice remaining in the MACD helps create the Thursday and Friday recovery in price.

The expectation is for the SPX to roll over in this daily time frame. The thin red lines in the right margin show how the indicators are sloping negatively after the all-time high, however, this is not negative divergence since price did not make a new high on Friday. The key is that thin red line for the MACD. As long as the MACD remains below that thin red line, stocks should roll over to the downside. If stocks rally, it does not matter, they will roll over. But if price floats higher and the MACD moves higher, that will extend the upside for a day or few.

Price has violated the upper band so the middle band at 2609, and rising, is on the table. If price floats higher to begin the week, the 2662-2663 upper band is the likely target and if price prints there check the MACD line as described above to see if it negatively diverges or if it makes a higher high.

The CPC and CPCE put/calls printed the uber lows 9 days ago so the expectation was for a pullback in stocks. Instead, the powerful Powell Rally and tax-cut bill joy jam the chart higher. A pull back occurs of about one-half the gains but the SPX rallies again last week on Thursday and Friday. The CPC is up to 0.94 and the CPCE is at 0.60. A selloff remains on the table for equities until a tradeable bottom occurs when the CPC prints above 1.20 and the CPC prints above 0.80. Thus, mixing the above analysis together, forecasts a pull back on tap going forward.

The central bankers are always in play ready to goose stocks higher especially by crushing volatility. Global central bankers collude daily to depress the VIX and guarantee an ever-rising stock market. The FOMC 2-day meeting is Tuesday and Wednesday and stocks are usually bullish into the Fed events. This week is OpEx with Quadruple Witching on tap on Friday. For OpEx week each month, a Tuesday low typically leads to a Wednesday high so the bulls have seasonality factors on their side especially from Tuesday into Wednesday.

Mixing the seasonality stuff into the analysis above, stocks may dip to begin the week into a Tuesday low then rally into Yellen's press conference on hump day. The expectation is for lower prices ahead but the central bankers are extremely powerful and Wednesday afternoon will have to play out. The central bankers are the market. 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.

Note Added 4:24 AM EST on Tuesday Morning, 12/12/17: As you saw at the opening bell on Monday morning, the MACD line squeezes out a higher high so the bulls ran stocks higher in the Monday session. Equities typically rally into the Fed decisions and traders are front-running this seasonality factor. If you bring up the SPX daily chart, note that the RSI, histogram stochastics and money flow remain negatively diverged wanting the S&P 500 to sell off, but the MACD line wants another higher high in price. If the Fed was not on tap this week, this would typically create a couple day jog pattern, down one day, then back up to satisfy the MACD. If at that higher high with price the MACD line goes neggie d, then the top is in. If the MACD line continues higher, or if one of the other parameters move higher, the bulls will keep extending the upside. The stock market is likely creating drama into the Fed decision and Chair Yellen press conference on Wednesday afternoon.