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

The S&P 500 2-hour chart keeps sneaking higher on the happy US-China trade talk and global central banker easy money. The SPX closes at 2636 above the 50-day MA at 2627 and 100-week MA at 2618. The 20-month MA is 2663. The SPX remains above the 200 EMA on the 60-mintue chart at 2584 so the market bulls are whistling happy tunes.

The Whitehouse and the world's central bankers (Fed, ECB, BOJ, PBOC) are whispering sweet-nothing's into trader's ears pumping stocks higher. Yesterday's happy talk on a US-China trade deal pushes the RSI a touch higher than the prior high now at the 70% overbot level. The stochastics remain overbot agreable to a pullback.

That RSI strength, manufactured by the happy news, may create another jog move for price; down, then up again, then the RSI should print neggie d again and top out. So that would be 2 to 4 hours of trading time. Comically, if stocks are set to top say, by 1 PM EST Friday, President Trump will likely tweet a happy US-China trade talk message between 8 AM and 10 AM to goose the stock market into the weekend. This is the way the game is played.

The subtle move higher in price after the tight bands (pink arrows) is very surprising. With bands that tight, the point move should have been far larger and faster. The price action from the tight bands is very odd and rare; you will never see this type of calm behavior from tight bands. Perhaps the chart wanted to take price sharply lower, as the neggie d, overbot condtions, rising wedge and upper band violation indicate, however, the happy trade talk hype nullified the down move. Since the power and energy would be to the downside, the happy talk only manages to keep nudging price higher. The middle band at 2604 remains on the table.

The rising wedge pattern is ominous and wicked. As Keystone always warns, the failures out of rising wedges can be quite dramatic and that one is textbook. The interplay of the SPX 2-hour chart and the daily chart is important in recent days as this global goosing occurs to begin the new year. The MACD line remains long and strong on the daily chart wanting another higher higher after any pullback in that daily time frame.

Putting aside the happy talk news bites that keep goosing stocks higher over recent days, one of two paths may emerge. Either the near-term top occurs right now with stocks topping this (Friday) morning or at lunchtime, then dropping for a few hours or days, then back up again for a day or so, then top out again, and then price falls like a rock, then the base is in for a multi-week upside rally through February, or, the 2-hour chart may continue to hang on and inch slowly higher as the daily chart tops out over the next couple days, then price falls like a rock, then the base is in for a multi-week upside rally through February.

The central bankers, US-China trade talks and the US government shutdown drama news will continue tossing the stock market to and fro. All the news is joyous over the last week sending stocks higher and higher. Keystone will keep bringing on index shorts for a VST trade. It is interesting to watch the interplay of the news and the charts. If the US announces an impasse with the China trade talks over the next day or two, and there is no concrete progress, and it looks like tariffs will actually be increased come the March 1st deadline, the rising wedge may absolutely crush price with a spectacular drop. 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.