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

On the SPX daily chart, we are waiting for the negative divergence to identify the top. The MACD line remains long and strong and not willing to negatively diverge as yet. This has to occur for the top to be in on this daily basis. The money flow is now long and strong so that will also need to go neggie d.

The RSI, histogram and stochastics are cooked and the red lines show the neggie d. Stochatics and RSI are overbot open to a move lower. Price is extended above the moving averages requiring a mean reversion lower. The upper band is violated so the middle band, the 20-day MA, at 2726 and rising, is on the table.

Note that price has not back-kissed the 20-day MA since November; this is a long time. Price remained elevated above the 20 for 6 weeks in September-October but now the SPX is above the 20-day MA for 9 weeks running. The SPX needs to show respect to the 20-day.

The ADX shows a strong upward trend in place. The uber optimism and bullish strength this year has created additional joy in the charts which will extend the elevated prices.

For now, in this daily time frame, the RSI, histo and stoch's neggie d will create weakness, as is occurring today, however, after a slump, price will want to come back up using the long and strong MACD line and money flow fuel. If those two indicators turn neggie d at that time, the top is in for this daily basis. The question is whether a short pull back lasts one day, two or maybe three or four days, before price is going to come back up for another high to satisfy the MACD line. The 2-hour chart can be used to see the extent of any downside move.

The low put/call ratios want their pound of flesh from the stock market so the move lower in the SPX, once it begins, may be quick and eye-opening. The SPX will top out as soon as the MACD rolls over at anytime in the days ahead and that may begin substantive downside of 40 to 120 S&P 500 handles.

Note the large selling volume candlestick for Tuesday versus the shorter buying candlestick for Wednesday's euphoric stock market rally.

The SPX weekly and monthly charts continue to show juice in the chart indicators so after the selloff in the daily basis, the SPX will come back up again to the record highs on the weekly basis. 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.