Thursday, February 23, 2017

SPX S&P 500 30-Minute Chart; 8/34 MA Cross; New All-Time High; Negative Divergence; Tight Bands

Here's the SPX 30-minute with the 8/34 MA cross. This spurt higher this morning is a new record high for the SPX at 2368.26. The 8 MA remains above the 34 MA by a couple points so the bulls remain in control of the stock market. To push the 8 MA lower, the SPX price will need to move below the 8 MA at 2363 and head lower to drag the moving average lower for a negative cross. Price is at 2360 so that will continue to send the 8 MA down to the 34 MA for a potential negative cross. Market bears got nothing until they receive the negative 8/34 MA cross.

The red lines show neggie d across all indicators so down would be expected in this 30-minute time frame. Look at those tight standard deviation bands (green lines). Whoa, doggie. That is tight. There should be a big move at hand. Tight bands do not tell you direction but it appears she may be breaking downwards. The bulls are sneaky, however, so you never know. The next hour or two may be entertaining. 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.

SPX S&P 500 2-Hour Chart; New All-Time High; Overbot; Negative Divergence; Upper Band Violation

Now just a doggone moment. The 2-hour was out of gas but managed to come up for one more high. Chalk it up to the little bump in the RSI that managed to squeeze out that last bit of oomph. The Fed has been cheerleading for a rate hike for March with all their might but traders are not buying what the FOMC is selling. No one expects a rate hike until June. Perhaps stocks are receiving some buoyancy since the central bankers will remain accomodative for another four months at the same time that Trump keeps tossing out tall promises like candy.

The red rising wedge shows the price top with neggie d across all indicators. This spurt higher this morning is a new record high for the SPX at 2368.26 and with the higher high in price, the negative divergence remains across all indicators (maroon lines). Price does not have anymore gusto available to move higher in this 2-hour time frame. Price will need to touch the middle band at 2354 and rising since the upper band has been violated. The lower band at 2337 and rising is also in play. The MACD line prints a negative cross with its signal line which is bearish.

If bearish, what you want to see is lower lows for the indicators. The RSI is sneaking out a lower low. That will create a weak and bleak vibe and send stocks lower. Bulls will try to keep stocks elevated by sending President Trump, or Fed Chair Yellen, to a microphone where they can espouse more promises of rainbows, joy and higher stocks forever. 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.

Tuesday, February 21, 2017

SPX S&P 500 30-Minute Chart; 8/34 MA Cross; Negative Divergence Developing

Here is the very short term (VST) look at the SPX in the 30-minute time frame. One of the first signs that the bears will be gaining traction over the bulls and sending stocks lower will be the 8 MA crossing down through the 34 MA on the 30-minute. The 8 is above the 34 right now projecting bullish stocks for the hours ahead. The bears can only curl the 8 MA downwards by price dropping below the 8 MA.

See that spike high in price that occurred six candlesticks ago. That would be 3 hours of time ago so about 10:30 AM EST this morning. Price makes the new high but the RSI remains elevated and the ROC was trying to sneak higher as well. This hints that price wants to come up one more time in this 30-minute time frame so the indicators can firmly print negative divergence and place the top.

The 2-hour chart is cooked and wants price to move lower in the 2-hour time frame. Thus, in this VST, keep the door open for price to come up for a matching high at 2364-2367 over the next hour and this should come with neggie d across all indicators, which should jive with the 2-hour chart, and place the near-term top. As long as the indicators do not print above the thin red lines in the margin, the chart is cooked. So price either falls under its own weight from here, or will sneak higher over the next hour or so and place that matching price high that locks in the neggie d and then downside ahead.

Bears, however, got nothing until they create the negative 8/34 MA cross. Note earlier in the month the bears tried to push lower but the bulls prevented the negative 8/34 cross slapping bears in the face. Slap, slap. Then only last Friday, bear push lower in the morning only for the bulls to arrive touting Presdient Trump's tax reform package, and slap the bears silly once again preventing the negative cross. Slap, slap.

Judging from the set-up 30-minute and 2-hour charts, price should move lower in the hourly time frame going forward and the 8/34 MA negative cross on the 30-minute would likely, or potentially, occur tomorrow. The behavior when the 8 comes down to test the 34 will be key. 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.

SPX S&P 500 2-Hour Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

Here is the SPX 2-hour chart which has been interesting to watch over the last week. We have been waiting for the neggie d to print across all indicators to identify the top. As last Friday's bell rang creating the higher high in price, the indicators finally negatively diverge across the board. Those pesky bulls, however, keep charging higher. Note, however, with the elevated prices, the indicators remain neggie d (red lines). Stocks want to take a rest but President Trump keeps pumping them higher by injecting tax reform joy into bullish veins.

The bulls keep trying to create slivers of joy as evidenced by the RSI that tries to sneak higher during today's trade. The chart is cooked. The only thing that can save it is happy talk from the president or from the Fed, ECB or other central bankers.

Price has violated the upper band again without yet showing respect to the middle band at 2344 and rising so this is on the agenda. The lower band at 2324 and rising is in play depending on how price reacts when it comes down to kiss and test the middle band at 2344 and rising.

The SPX support/resistance levels from a previous post are 2366, 2351, 2340-2344, 2321-2324, 2311, 2308 (20-day MA) and 2296-2300 very important support. 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.

SPX S&P 500 Daily Chart; Rising Wedge; Overbot; Negative Divergence Developing; Price Extended; Upper Band Violation

Traders are salivating over President Trump's tax reform package that was promised any day. Market participants expect a brand new shiny pony so the orange-headed leader will have to deliver.

The S&P 500 daily chart has a rising wedge pattern in play which is bearish. Price is at the top rails with today's euphoric joy. Look at the astounding move with price riding that upper standard deviation band for the last eight days! Since the upper band is violated, the middle band at 2308, and rising, is in play as well as the lower band at 2255 depending on how price react when it comes back to kiss the middle band which is also the 20-day MA at 2308 and rising.

Price is above the 20-day MA above the 50-day MA above the 100 above the 150 above the 200 so a mean reversion lower is needed. The red lines show neggie d wanting the top to be in for price but the RSI is long and strong. Ditto the MACD line although it is negatively diverged over t he last three months. The red lines will create a pull back in this daily time frame but after a day or few, price will want to come back up to satisfy the RSI. The RSI and stochastics are overbot and greatly elevated so the upside cannot last much longer.

So price will likely top out and retreat but want to come back up perhaps for a top as this week ends. As soon as the RSI displays neggie d when price comes up for the mathcing high, the SPX will be cooked inthe dialy time frame. The new moon peaks on Sunday and stocks are typically weak moving through the new moon so that would be say from Thursday or Friday through Monday or Tuesday.

Equities rallied strong so far this month. When this behavior happens, the month usually ends on a down note. The month ends on Tuesday, 2/28/17, only five days away. The RSI will tell you when the chart above is cooked. 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.

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

The S&P 500 weekly chart rockets higher on the Trump Rally euphoria from the November bottom. note that price is near the upper standard deviation band but did not touch it, however, price had already violated the upper band in December. Therefore, that middle band at 2235 and rising remains in play. The bulls are sneaky taking price parabolically higher forcing every bear in the market to cover.

The red rising wedges are ominous. The red lines for the indicators show neggie d in play wanting a smack down in price but the MACD line remains long and strong. Price will likely come back up one more time after a pull back to satisfy the MACD on this weekly basis. Both the RSI and stochastics are overbot and negatively diverging. Thus, a jog move is likely, down, up, then down. So price may retreat over the next week or two to satisfy the neggie d shown by the red lines now, but then price will come up again to make the MACD happy, and then, if the MACD is sloping down showing neggie d, the top will be in on the weekly basis.

The ADX says the trend higher in price is not a strong trend despite its parabolic nature but the ADX is on the verge of moving up into that pink box that would label the weekly uptrend as strong and likely extend the buoyancy in the stock market.

The monthly chart hints at a major market top potentially occurring in the March-June time frame. The weekly chart wants a pull back now but price will come back up because of the MACD line. The weekly chart would be agreeable to a multi-year top occurring since its indicators are elevated in overbot areas which is typically a multi-year event. Stocks will likely retreat for a couple weeks, then come back up for a matching high perhaps into the Fed rate meeting on 3/14/17 and 3/15/17, then down again as long as the MACD rolls over. 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.

SPX S&P 500 Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended Above MA's

The SPX monthly chart will receive a new print next Tuesday, 2/28/17. February is a big-time up month when historically it is a very weak month for stocks. Note the four white candlesticks gapping higher each month in a euphoric orgy of joy. That rally started with President Trump's election victory and promises of lower taxes, less regulations and huge infrastructure spending. The stock market went vertical after Trump, and his two Goldman Sachs henchmen, Cohn Adn Mnuchin, started slashing financial regulations. A big party is taking place in the financial sector. Wall Street fat cats are staggering around, drunk off Trump wine, dabbing their cigar ashes in the face of the huddled masses.

The red lines show the rising wedge, overbot conditions and negative divergence that correctly forecasted the spring 2015 top. The Fed and other central bankers stepped in to save the day creating that Tweezer Bottom (brown circle) early last year. The central bankers are the market. Stocks rally to new highs last year with universal negative divergence acrosss all indicators (marooon lines) show another market top and spankdown was at hand, and occurs. Stocks began trailing lower in Au gust, September, October, but then the orange-headed one came to power in early November creating the latest push higher in equities (blue line).

The SPX is up for four weeks in a row and February should remain a white (positive) candlestick barring any serious downdraft before next Tuesday. President Trump promised a tax reform program any day so that will receive strong scrutiny.

The SPX catapults above the upper standard deviation band. The bullishness is off the charts. The middle band at 2105 is in play on the monthly basis. With the latest push higher, note the red lines remain negatively diverged for the indicators over the couple-year and longer time frame. Over the last four months, however, due to this wild and strong parabolic rally, there is lots of momentum in stocks, and the short green lines show long and strong behavior in this very near-term on a monthly basis.

The ADX is down at 16 so the trend higher in stocks is not a strong trend. The rally in stocks was a very strong trend (pink box) in late 2013, 204 and into 2015, but not since. The central banker stick save last year and the Trump Rally starting in November have created upside joy in stocks but the ADX trend indicator is not impressed.

Since the parabolic, gapping-up behavior, is reflective of strong momo, a jog move may be in order before a potential multi-year top occurs (down, up, down, or down, up, down, up, down). So March may be a down month, the April back up for the top. Or, generally, down in March, up in April, down in May, then a multi-year top potentially printing in the May-June time frame. Speaking broadly, the above chart is consistent with a multi-year top printing anytime now through June. The March-April time frame may be a prime target for a major top since this is when the ECB will taper its monthly QE purchases even though Draghi does not want it to be called a taper.

So stocks should retreat to take a rest and the middle band at 2105 is a lower level in play which is 260 handles under current levels. Generally, it will not be surprising to see the S&P 500 down in the 2100-2200 range say 2 or 3 months out. I twill depend on how much more mojo that Trump can generate specifically by the tax reform package. 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.

SPX S&P 500 Support, Resistance (S/R), Moving Averages and Other Important Levels for Trading the Week of 2/21/17

SPX (S&P 500) support, resistance (S/R), moving averages and other important levels are provided for the trading week of 1/23/17. Levels shown in bold are strong resistance and support. Bold and underlined levels are very strong and important S/R.

For the S&P 500 in history, the all-time record high print is 2351.31 on 2/16/17 and the all-time closing high is 2351.16 on 2/17/17. The all-time record intraday low is 666.79 (the infamous 666) on 3/6/09 and all-time closing low is 676.53 on 3/9/09.

For 2017, the intraday high is 2351.31 and closing high is 2351.16. For 2017, the intraday low is 2245.13 from the first trading day of the year on 1/3/17 and the closing low for the year thus far is at 2257.83 on 1/3/17. For 2016, the intraday high is 2277.53 on 12/13/16 and closing high at 2271.72 on 12/13/16. For 2016, the intraday low is 1810.10 on 2/11/16 and the closing low for 2016 is 1829.08 on 2/11/16. The intraday low in 2015 is 1867.01 on 8/24/15 and closing low for 2015 is 1867.61 on 8/25/15.

The upside orgy in stocks continue. President Trump keeps tweeting out nuggets of  bullish joy such as hinting at big tax cuts so equities rocket higher. The president tosses in a favorable comment about reducing financial regulations and banks rocket higher taking the stock market higher. President Trump, and the central bankers, sprinkle magic happy dust on the stock market each day.

US markets were closed yesterday for the Presidents Day holiday so the holiday-shortened week begins this morning (Tuesday). For Tuesday, with the S&P 500 starting at 2351.16, the highest closing number in stock market history, the market bulls need any smidge of positivity in the S&P futures and the SPX will rally several handles after the opening bell. S&P futures are up +4 about one hour before the opening bell.

The bears need to push the SPX under 2340 to accelerate the downside. A move through 2341-2350 is sideways action to begin the week.

If the bears push down through 2340, the 2321-2322 support level is next. Other lower support levels are 2311, 2304, 2296-2300 and 2289. February began at 2279 and there are six days remaining in the month. If the bears want to create a negative month, they had better get busy and start pushing south. If stocks begin selling off, and the 2296-2297 level fails, equities will flush lower to test the February starting number at 2279.

The SPX 2-hour chart is negatively diverged indicating a near-term top at hand. Ditto the low CPC and CPCE put/call ratios. The SPX daily chart is negatively diverging with overbot RSI and stochastics hinting at a top on the daily basis occurring at anytime in the coming days. The new moon peaks on Sunday and stocks are typically weak moving through the new moon. When a month is up strongly, during the last few days of the month, price typically retreats. Thus, the expectation would be for a near-term top in stocks at anytime and perhaps weakness into early next week to finish the month.

President Trump, in his braggadocio style, said a couple weeks ago that in a couple weeks he would provide details on his tax plan. Time flies when you’re having fun. It is time for the orange-headed showman to put his tax reform strategy on the table and show everyone what he’s got. No doubt the tax plan will move markets especially individual sectors. Of course if he delays the release of the plan, traders will likely not view that kindly as the president would lose credibility in what he says.

The strongest support/resistance is 2351, 2322, 2311, 2296-2300, 2289-2290, 2279, 2272, 2263, 2234, 2213, 2205 and 2194. The week begins at 2351 an epic and historic high. There are many gap-up moves occurring in stocks so these gaps will need filling at some point forward. Price takes big leaps through the 2299 to 2311 space, then 2311 to 2322, then 2322 to 2351. Note the big air pocket between 2213 and 2234.

Keybot the Quant algorithm remains bullish continuing to print epic +100 numbers. This is the maximum possible for the algorithm and hints that a multi-year top may be forming in markets currently due to these historic excessive readings. Market parameters, sentiment and euphoric activity is at historic highs. The party is in full swing with bullish traders donning lampshades on their heads, dancing on tabletops, drinking Trump wine and celebrating higher stock prices that never go down. Every day of life is a party for bullish traders.

Note: If the list below displays any blank spaces, view it in a different browser. The data is current up through 2/20/17.

2351 (2/16/17 All-Time Intraday High: 2351.31) (2/16/17 Intraday High for 2017: 2351.31) (2/17/17 All-Time Closing High: 2351.16) (2/17/17 Closing High for 2017: 2351.16)
2351.31 Previous Week’s High
2351.16 Friday HOD
2351.16 Friday Close – Tuesday Starts Here
2339.58 Friday LOD
2321.42 Previous Week’s Low
2303.52 (20-day MA)
2296.28 (200 EMA on 60-Minute Chart a Keystone Market Turn Signal)
2279.14 (50-day MA)
2278.87 February Begins Here
2278 (12/13/16 Intraday High; 2277.53)
2272 (12/13/16 Closing High: 2271.72)
2258 (1/3/17 Closing Low for 2017: 2257.83)
2245 (1/3/17 Intraday Low for 2017: 2245.13)
2239 (12/30/16 Closing Low: 2238.83)
2238.83 Trading for 2017 Begins Here
2234 (12/30/16 Intraday Low: 2233.62)
2224.68 (20-week MA)
2218.76 (100-day MA)
2213 (11/25/16 Intraday and Closing High: 2213.35)
2202.07 (150-day MA; the Slope is a Keystone Cyclical Signal)
2194 (8/15/16 Intraday High: 2193.81)
2191 (12/1/16 Closing Low: 2191.08)
2190.25 (10-month MA)
2190 (8/15/16 Closing High: 2190.15)
2187 (12/1/16 Intraday Low: 2187.44)
2173.12 (200-day MA)
2168.96 (12-month MA; a Keystone Cyclical Signal) (the cliff)
2155.23 (50-week MA)
2135 (5/20/15 Intraday High: 2134.72)
2133 (7/20/15 Intraday High 2132.82)
2131 (5/21/15 Closing High: 2130.82)
2130 (6/22/15 Intraday High 2129.87)
2128 (7/20/15 Closing High: 2128.28)
2126 (4/27/15 Intraday High: 2125.92)
2124 (6/23/15 Closing High: 2124.20)
2121 (4/24/15 Intraday High: 2120.92)
2120 (2/25/15 Intraday High: 2119.59)
2118 (4/24/15 Closing High: 2117.69)
2117 (3/2/15 Closing High: 2117.39)
2116 (11/3/15 Intraday High: 2116.48)
2111 (4/20/16 Intraday High: 2111.04)
2110 (11/3/15 Closing High; 2109.79)
2104.99 (20-month MA)
2104 (12/2/15 Intraday High: 2104.27)
2103 (12/2/15 Closing High: 2102.63)
2102 (4/20/16 Intraday High: 2102.40)
2094.63 (100-week MA)
2094 (12/29/14 Intraday High: 2093.55)
2091 (12/29/14 Closing High: 2090.57)
2085 (11/4/17 Closing Low: 2085.18)
2084 (11/4/17 Intraday Low: 2083.79)
2079 (12/5/14 Intraday High: 2079.47)
2076 (11/28/14 Intraday High: 2075.76)
2075 (12/5/14 Closing High: 2075.37)
2073 (11/26/14 Closing High: 2072.83)
2071 (11/21/14 Intraday High: 2071.46)
2059.54 (150-week MA)
2056 (11/18/14 Intraday High: 2056.08)
2046 (11/13/14 Intraday High: 2046.18)
2044 (12/31/15 Closing High: 2043.94)
2019 (9/19/14 Intraday High: 2019.26)
2011 (9/18/14 Closing High: 2011.36) (9/4/14 Intraday High: 2011.17)
2007 (9/5/14 Closing High: 2007.71)
2005 (8/26/14 Intraday High: 2005.04)
2003 (8/29/14 Closing High: 2003.37)
1993 (1/15/15 Closing Low: 1992.67)
1991 (7/24/14 Intraday Top: 1991.39)
1988 (7/24/14 Closing High: 1987.98)
1986 (7/3/14 Intraday Top: 1985.59)
1985 (7/3/14 Closing High: 1985.44)
1981 (2/2/15 Intraday Low: 1980.90)
1978.88 (200-week MA)
1968 (6/24/14 Intraday Top: 1968.17)
1963 (6/20/14 Closing High: 1962.87)
1956 (6/9/14 Intraday Top: 1955.55)
1953.67 (50-month MA)
1951 (6/9/14 Closing High: 1951.27)
1924 (5/30/14 Intraday Top: 1924.03) (5/13/14 Closing High: 1923.57)

Friday, February 17, 2017

SPX S&P 500 2-Hour Chart; Rising Wedge; Overbot; Negative Divergence; Potential Island Reversal; Gap Fill

The SPX 2-hour chart has led the way forward over the last week so we may as well follow it through the potential stock market near-term top which should be at hand. Some sogginess in price has appeared over the last few candlesticks. The neon circle shows a Tweezer Top, typically you want to see longer shadows out the top of the two candlesticks but it is good enough for government work and can be called a tweezer.

Since price makes a matching or higher high at the tweezer top, the indicators can be assessed again to see if universal negative divergence is in play yet, or not. As seen by the red lines, the indicators are all neggie d except that pesky MACD line. Note how it remains long and strong as the price printed the matching high. Bears need the MACD to be negatively diverged to know the top is in. Thus, the SPX will probably come back up one more time for a matching high. At that time the MACD line should finally display neggie d and the top will be in. A jog move, down, up, down, would take a couple-three candlesticks which is today into Tuesday's open (2 to 6 hours).

The US stock market is closed on Monday for Presidents Day. Stocks are typically bullish the day before a three-day holiday weekend so this jives with the MACD line that would like to see another matching high for price before it gives up the ghost, perhaps following the blue path.  If the S&P 500 comes back up to test the highs from the tweezer top, check the indicators. If they are all below the thin red lines drawn in the right margin, then the near-term top is in.

Since the MACD was only a sliver higher or even flat as price made the higher high, the top could already be in with the tweezer top. If so the purple path ahead may be the route taken (dropping from here). Price should seek that cluster area as shown by the brown lines. Note that the SPX remains on Gilligan's Island above 2322. An island reversal pattern may occur if price drops to 2322, then collapses back down through the gap to 2318 and lower. Otherwise, price may choose to simply trend lower and fill the gap at 2318-2322.

Stocks should top out today as described. If not, then first thing Tuesday morning. The only thing that can change the forecast is if the Fed or other central bankers announce more easy money or if President Trump cheerleads the tax plan, infrastructure spending and/or reduced regulations. It will be interesting to see how far the SPX may venture south due to the low put/call ratios.

The Keybot the Quant algo calls out UTIL 666.63, GTX 2364 and VIX 13.17 as key levels that would stop the stock market rally. Any of these crosses (lower utilities, lower commodities or higher volatility) will tell you that more downside is in progress for the stock 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 7:43 PM EST: The bulls recover to new highs as the session plays out as described above. The holiday seasonality and long and strong MACD line kicked in for the higher high in SPX price. The SPX ends the week with a new all-time closing high at 2351.16 but not a new all-time high which remains at 2351.31. The new higher high in price prints and if you bring up a new 2-hour chart, you can see universal neggie d across all indicators including the MACD line. The SPX is cooked; there is no more upside oomph available. The only thing that can save the day is central banker or President Trump happy talk. US markets are closed on Monday for Presidents Day. Since the 2-hour chart is cooked and a pull back in stocks can now begin in earnest, it is an interesting place to park the long holiday weekend. If a negative news event occurs over the next three days, the weekend, a negative catalyst, that will have a double-whammy negative effect on stocks slamming price down hard come Tuesday morning. The weekend will probably be quiet and no biggie but if something bad happens, Tuesday could be quite ugly. The UTIL, GTX and VIX parameters above all remain in the bull camp this is a blow to the bear thesis. Market bears need lower utes and commodities, and higher volatility, next week, or any pullback will only be a minor blip. Each one of these three parameters failing will send stocks another strong leg lower. Keystone can update the 2-hour chart again over the weekend. The CPC put/call ratio is at 0.93 and the CPCE is at 0.59 so the stock market should roll over now and sell off until the CPC prints above 1.20 and the CPCE above 0.80.

Thursday, February 16, 2017

VIX Volatility Daily Chart

Keystone must rub his eyes this morning. An astonishing sight occurs. The VIX has a 12-handle printing at 12.06 creating weak S&P futures a couple hours before the opening bell. A VIX at 12 remains subdued and bull-friendly but it is now off the uber low 10-11 numbers and it even printed a 9-handle very briefly a week or so ago.

The red circles show when the bears control the stock market, above the 200-day MA, and the green circles show the bulls in full control, like now, with the VIX under the 200-day MA. Market bulls celebrate each day drinking Fed champagne and Trump wine completely unconcerned about a market selloff.

Watch two levels in the coming days. VIX 13.17 is identified by the Keybot the Quant algorithm as a key bull-bear line in the sand. VIX 13.90 is the 20-day MA. If the VIX moves above 13.17, stocks will be tumbling lower. If VIX  moves above 13.90, the stock market will be dropping like a rock. If VIX slips back below 12, the bulls will laugh at the hapless bears as the stock market moves higher again. If the VIX remains between 12.00 and 13.17, the stock market will float along sideways with a slight upward bias. 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 8 PM EST Friday Evening 2/17/17: The VIX finishes the week at 11.49; an 11-handle far under 12. The bulls slap the bears in the face. Slap, slap. Market bears need higher volatility otherwise they will be slapped around each and every day. Slap, slap.

SPX S&P 500 2-Hour Chart; Overbot; Negative Divergence Developing

Let's stick with the SPX 2-hour chart as the topping drama continues to play out. Price has gone parabolic and is trading like a commodity. These are epic times.

Stocks cannot roll over until the MACD line rolls over with neggie d. At the thin blue line, as yesterday's trading was underway, price makes a new higher high. When this occurs the RSI, histo, stoch's and money flow are all neggie d (good for bears) but that pesky MACD keeps sloping higher so you knew there would be another higher high on tap for price in this 2-hour time frame. The ascending triangle has hit the 2340 target and plenty more.

The market bears cannot catch a break. President Trump stood on a soapbox waving an American flag promising to slash taxes and implement serious tax reform. The president says the new tax plan is coming very soon. Stocks catapult higher led by the banks. The financials have driven the bulk of the upside gains this week.

Interestingly, traders are buying banks touting inflation and a steeper yield curve but that is not occurring. After a brief pop on Fed Chair Yellen's testimony over the last couple days, Treasury yields remain subdued only increasing about 3 basis points over the last two days and uniformly across all durations which is not resulting in a steeper yield curve. The US dollar index is not moving higher in fact has fallen from 101.80 yesterday to 100.69 now. The chance for a March Fed rate hike is only 42% (typically you want to see about 80% to be sure the hike is on tap). The inflation talk sounds more like bluster and is not reflected in the numbers. Gold was 1230-ish a couple days ago and is now at 1237 so it is not moving higher to any significant extent.

Anyhoo, back to the 2-hour chart, the SPX price moves higher and the RSI kicks on the afterburners and joins the MACD line with more long and strong upside. The histogram, stochastics and money flow indicators are cooked and want price to roll over and die. Sometimes waiting for negative divergence (and positive divergence after a downtrend) is like herding kittens. Once several indicators line up, others go askew. So now, a higher high in price would be expected until both the RSI and MACD roll over with neggie d.

This process can take from 2 to 4 candlesticks (4 to 8 hours) which would be jog moves. Price would move down, then back up, then down, up, then roll over for the near-term top as called out by the low put/call ratios, or anytime sooner. S&P futures are soggy, down -4, as this message is typed about 3 hours before the opening bell. This would provide a down candlestick, then when price likely comes back up for a matching or higher high, check to see if the RSI and/or MACD line slopes negatively to finally call the near-term top. The top is in when the MACD line goes neggie d which should be today or into tomorrow morning, of course barring any other euphoric promises by the new orange-headed leader or the Fed coming out making new easy money promises. A logical target for the market top would be at lunchtime today or in the afternoon; watch the MACD line since it will tell you exactly when.

Charts price in all information up to the minute but cannot price in news events ahead of time like the president's news on tax reform yesterday. The chart above is adjusting after President Trump's proclamations for far lower taxes ahead for individuals and businesses. The expectation would be for the near-term stock market top to occur today. This is historic action in the stock market. If you are a novice trader, realize that an epic story is being written but no one yet knows how the long 8-year Keynesian party ultimately ends. A recession, when it hits, will change everyone's lives. Save your money. 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.

Wednesday, February 15, 2017

SPX S&P 500 Daily Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

The red rising wedge is an ominous pattern on the S&P 500 daily chart. The collapses from rising wedges can be quite dramatic and the CPC and CPCE put/calls indicate that a market top is at hand likely this week. The red lines show universal negative divergence across the three month time frame. RSI and Stochastics are overbot. These are all bearish indications.

The RSI and MACD are trying to squeeze out some more juice. The banks have rocketed higher after the Trump administration pledges to slash financial regulations. The banks carry the broad indexes higher. Traders are buying stocks with reckless abandon.

Price violates the upper standard deviation band so the middle band at 2291 and rising is in play. The SPX should retreat off that upper rail and perhaps test the lower rail of the wedge at 2320-ish. Price may  bounce there and try and stay inside the wedge but then should fail. Once price fails below the red trend line of the wedge it will then come back up to test the underside of the bottom trend line and then likely fail setting its sights on the middle band at 2291 and rising and even the lower band at 2253 that is moving sideways.

Price is extended way above the moving averages needing a mean reversion. A pull back is at hand unless there is positive news from President Trump that further pumps stocks higher for a couple more days. 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 7 AM EST on Thursday Morning: The SPX prints new record highs again. President Trump touted tax reform which creates big upside in banks and stocks yesterday. The RSI on the daily chart is now a higher high than December so a jog move is likely needed before the chart rolls over such as down today, perhaps up Friday, then the roll over off the top going forward. The bull party keeps hanging on from happy talk from the Federal Reserve and the president.

SPX S&P 500 60-Minute Chart; Ascending Triangle; Overbot; Rising Wedge; Negative Divergence; Gap; Potential Island Reversal

The SPX 60-minute chart shows universal negative divergence with the indicators as price climbs higher into the rising wedge pattern. RSI and stoch's are overbot. So a move lower would be expected in this one-hour time frame, however, the previous 2-hour chart shows that long and strong MACD line so price will likely come back up after any drop. Once the MACD line goes neggie d on the 2-hour chart the top will be in.

The ascending triangle, a bullish pattern, receives the breakout at 2300. The vertical side is 40 handles so the upside target is 2340 (2300+40). Price is essentially there now satisfying the ascending triangle pattern. The chart shows price on an island above 2322; we can call it Gilligan's Island considering the market antics. If price comes down and then drops through  the gap from 2322 to 2318 and lower, that would be an island reversal pattern. The other option is that price simply retreats lower and fills that large gap at 2318-2322.

The 200 EMA on the 60-minute is 2285 and rising. This is a critical short-term market signal. Market bears got nothing until they push below the 200 EMA. Once that happens, stocks will begin falling in earnest. Market bulls are on easy street as long as price remains above the 200 EMA on the SPX 60-minute chart. 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.