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

Here is the S&P 500 2-hour chart updating the prior chart. The idea is to see how the negative divergence is proceeding so we can see where the potential top is at. The SPX is displaying a rising wedge pattern which is bearish. The RSI, stoch's and money flow are overbot agreeable to a pull back. The red lines show negative divergence in play. The RSI rolled over as price makes new highs so it is out of juice. Ditto the stochastics. Ditto the MACD histogram.

The money flow is sneaking a tiny hair higher and the MACD line remains long and strong. It is typically the last indicator to go neggie d to identify a top. So the neggie d red lines create downward pressure on price and prefer that the SPX does not move any higher. Aftre price stalls in the 2-hour time frame however, it wants to come back up again because of the long and strong juice with the MACD line.

So the top can potentially print after 2 candlesticks; a candlestick moves lower, then a candlestick comes back up to the highs. Two candlesticks are 2 to 4 hours of trading time. If the MACD line does not roll over on the next higher high in price, the chart would have to jog one more time, down-up, and that will likely be the near-term market top.

Something else special is happening. Note that the MACD line is negatively diverged over the last month and the only long and strong bull juice is for the VST (very short term; think minutes and hours). Thus, the chart is poised to roll over at anytime going forward. The violation of the upper standard deviation band wants to send price down to the middle band at 2700 at a minimum. The lower band at 2665 is also in play.

As typically happens going into a Fed meeting or major data dump such as the US Monthly Jobs Report in the morning, the chart will line out with negative divergence showing that the top is in and stocks are ready to fall. The bulls run out the clock into the events since the Fed speak, jobs reports or other data then typically creates a joyous rally. If so, the chart has to reset after a few candlesticks. The bulls are great at timing. In other words, if there was no jobs report tomorrow morning and if you knew the Fed or President Trump would not make comments to pump the stock market higher, the negative divergence forming on the chart would create a spankdown in stocks.

Thus, the drama continues to unfold. Check the 2-hour chart after the next candlestick forms and reassess the indicators. The bulls successfully ran the clock out today so the story will be told after the jobs report tomorrow. Barring any surprises in the market, the near-term top for stocks should occur at anytime before lunchtime tomorrow. The job report is an unknown. The beat goes on. 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 Saturday, 1/6/18: The price momentum for the bulls wins out during the first week of trading. The Jobs Report is disappointing with wage growth stagnant and actually weaker since the prior month's numbers  were revised lower. Inflation will not occur without wage growth occurring. Therefore, it is more likely the Fed will not hike rates as expected in 2018 and the easy money Keynesian party continues indefinitely which pushes stocks higher. The central bankers are the market. If you bring up the 2-hour chart above, you can see the MACD line continuing to slope higher; no neggie d yet. The RSI is sneaking out a higher high again as well so it is back to the 2 to 4 candlestick routine for the top (4 to 8 hours). The charts are pricing in the jobs report which is bad news that is good news for stocks. The most fascinating aspect of the first week of trading of 2018 is the crash in the utilities over the last few weeks. While everyone is celebrating perpetual easy money that pumps equity prices higher, the utilities have crashed into a -10% correction phase. This is extremely strange. A major sector (utilities) is in a correction but the broad indexes print all-time record highs. That makes no sense.