SPX Daily Chart Channels

The second week of 2012 tading begins with two upward-sloping channels (blue and red) in place for the SPX daily chart. Look at the green lines, all long and strong that led up into the October high. The indicators (green circles) show that they want to see a matchiing or higher high in price to occur in the future. Price has come back up to satisfy this forecast. Note the blue lines for the indicators are sloping negatively but negative divergence is not official unless price reaches 1285-1295 to match or exceed the October high. Nonetheless, the chart favors the market bears and although not official negative divergence, the blue lines will help to usher in market weakness anyway.

The stochastics are overbot with no more space to move upwards so this points to a market pull back as well. The price action also favors a rising wege pattern over the last month which is bearish. Looking at the bull side, price is maintaining above the 200-day MA. The action over the last couple weeks shows long and strong profiles for indicators and the money flow has popped up very strongly (blue circle) so this action hints that price will want to move back up again after a pull back occurs to satisfy the bearish comments listed.

Projection is for a pull back perhaps down to the 200-day MA for a test, but price will want to make a matching or higher high again compared to now. At that juncture, negative divergence should be in place across all indicators, including the money flow, allowing a more sustainable market downside move going forward. 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.