Friday, March 9, 2012

SPX Daily Chart Channel Rising Wedge Negative Divergence

Price has come back up for another look at the previous highs (red line); matching or perhaps exceeding the prior highs, but look at the nasty negative divergence (the downward sloping red lines for the indicators). This divergence says 'hey price, you are going the wrong way'. Price may sneak up a bit more but this negative divergence will spank her back down again just like Tuesday.

The volume participation keeps trailing lower indicating lack of interest by buyers. The sellers at these levels keep looking for bigger fools and bag holders to get caught up in the hype and run in to the long side, only to have their head handed to them once the negative divergence smack down occurs. Three days ago price bounced off the lower rail of the channel. The teal rising wedge is bearish. Watch the 10-day and 20-day MA levels when price moves back down.

Projection is for the negative divergence to usher in market selling either starting today, Monday or early next week. This is an ugly chart. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.
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4 comments:

  1. ArnieMarch 9, 2012 at 4:16 PM

    uuuugly indeed. Puppy will roll over soon. Doesn't seem like there's anything major on the horizon next week, such as earnings, jobs report etc etc. Market looks tired, just look at today's graph; DJI turned + in the last 5min... hahaha.

    Anyway, as for the missed opportunity. I take a 3-day 35+ point easy trade anytime. I do slap myself for missing that. But, I know not to chase and wait for a better entry. Placed some puts, see how that goes.

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  2. ArnieMarch 9, 2012 at 4:29 PM

    ps: note that the DJI closed below it's 10-day SMA today, kinda shows what AAPL does to all other indeces where it's listed in. Given that DJI is the senior one of 'em all, I think she's (DJI) telling us of things to come; especially if monday is a red day, then DJI has a classic bearish falling three methods pattern!

    Last word on AAPL: shows a dragon fly doji on a weekly scale, indicating the (up) trend is about to change

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  3. AnonymousMarch 10, 2012 at 2:25 AM

    KS, are the charts for the RUT or IWM showing negative divergence as well? Great call on TZA since you mentioned that it will back kiss the 18.81 level. I added some more TZA positions today. Also, an elliott wave theorist predicts that the 30-year bond is ready to launch which is bearish for the markets. Thanks again for all your great insights. Have a nice weekend.

    Steve

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  4. MimimoMarch 10, 2012 at 2:40 AM

    What do you think of the stock YMI?
    CYT387 is a once-a-day treatment for myelofibrosis

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