SPX Daily Chart Rising Wedge Upward-Sloping Channel

SPX daily chart shows a red rising wedge which would target 1440 and higher, but this is more likely after the central bank stimulus occurs, or happy Eyrope news occurs.  The blue upward-sloping channel highlights the upside rally since the May bottom. Price moved above the upper rail two weeks ago and is now up above the thin blue line showing an extension of the upper rail.  The buyers keep floating markets higher, there are no sellers, and the sellers in the market are holding pat, at least for now. The black line shows the continued drop in volume as time moves along. Volume will pick up after Labor Day, mid-September.

Price forms the higher highs and higher lows up thru the channel. Early August price hinted at a pull back but sometimes divergences are divergences, until they aren't.  Instead, price powered higher on the light volume into the consolidation zone a week ago and now the news highs.  The teal lines for the indicators are all negatively diverged and ready for a pull back but the markets keep surprising to the upside. The stochastics are at an obscene 98+, there is no room to go higher.  The MACD histogram is healthily negatively diverged now.

Watch the levels shown by the pink circles for the indicators in March.  If price takes out the March and early April highs, 1419 and 1422, see if the indicators move above the March levels, or not.  If they do not that will signify negative divergence and weakness ahead. If price moves up thru 1422 and the indicators take out the levels shown by the pink circles, the bulls will have gusto to the upside. The tip of the rising wedge is at 1440+, which likely will come once QE3 is announced, the question is does it come sooner, or later.  And does price explore 1425-1450 right away, or via any of the support levels below first, then back up. Watch 1419, 1422, and 1425 on the top side and 1413, 1410 (which sends price back down into the upward-sloping channel), 1406, 1403, 1394, 1391 and 1366.

Yesterday's candlestick is a dragonfly doji, the opening, closing and intraday high price is all the same. Typically this pattern occurs at the end of a long move down to signal a reversal back up.  At the top of a rally, a gravestone doji would appear which is the opening, closing and intraday low price all the same, which would be the same candlestick only the flat line on top would be at the bottom of the shadow. The gravestone doji would signal a move down but as the markets have shown over the last two weeks, the cross-currents are everywhere and mixed, but the dragonfly is interesting nonetheless.

Projection is a move down in price but that is like waiting for Godot. The stochastics have no further space to move higher.  The 1419 closing high for this year remains important. Price is hesitating before punching up thru but futures are higher as this missive is typed and it appears the bulls want to test the important 1419, 1422 and 1425 levels today.  The economic data is light this week so Europe and central bank talk rules the roost. 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.