SPX Daily Chart Overbot Rising Wedge Negative Divergence

SPX daily chart clearly shows a rising wedge where price sits at the apex. Rising wedges are bearish as well as the overbot RSI, stochastics and money flow conditions. Another higher high in price occurs so the indicators must be studied to make note of any divergences. Starting at the left hand side of the chart, the green lines show a long and strong profile, higher high in price with higher highs in the RSI, MACD line and money flow. This is bullish and forecasts another higher high in price coming in the future.

After that fast and strong October rally, the red lines for the MACD histogram and the overbot stochastics forced the November smack down. Then price started its upward trek from the holidays. In late January, price satisfied the higher highs demanded by the indicators in late October. Note that now negative divergence exists across the board--except for the RSI that wants to see another higher high. Today we receive the higher high at 1345 and negative divergence exists across all indicators--except for that pesky RSI again. See the green circles how the RSI poked a wee bit higher than the previous level? Thus, after a smack down from the negative divergence red lines, price will want to come back up again to the current highs to satisfy that pesky RSI, then the SPX should roll over for an extended move down off what should be negative divergence in place across all indicators at that time.

Note the 150-day MA green line that flattened then turned positive in early January indicating bullishness ahead (one of Keystone's secular Signals). The 20 MA crossed back above the 50 MA in late December also indicating bullish fun ahead. Note the pink 200-day MA flattening out. Watch this carefully since the 200 MA sloping positively will be a big feather in the bulls cap; if the 200-day MA moves flat and turns negative again this is obviously signaling big trouble ahead. Projection is for a price move down now, either starting Monday or Tuesday, first targeting the 1320's, then, depending on how the buy-the-dip crowd responds, perhaps a move to 1290-1310, then back up to the current price highs and a bit higher to satisfy that pesky RSI.  This behavior will also permit the weekly chart to line up with negative divergence after price comes back up on this daily chart.

In a nutshell, price should move sideways to sideways down for the  forseeable future, intial pattern of down then back up to 1330-1350, then roll 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.