Stock chart patterns and technical analysis (TA) explained simply. Disclaimer: This blog and all its contents are for educational and entertainment purposes only. Do not trade or invest based on any information seen on this blog. Please read Terms of Service. The K E Stone blog sites (Keybot the Quant) are blacklisted by Google, so enjoy the ad-free experience, and only use the Donate button when supporting the sites.
Pages
▼
Tuesday, December 4, 2012
BAC Bank of America Daily Chart Rising Wedge Overbot Negative Divergence
The financials are a very important influence on the broad indexes currently as verified by today's drama with XLF 15.67. According to Keystone's algo, the markets will remain weak if the XLF stays under 15.67. Banks such as BAC, GS, C, WFC and others will impact the XLF. The chart above shows BAC with price now in the apex of a rising red wedge pattern (bearish) with negative divergence across the indicators (bearish) and overbot stochastics (bearish). A stutter step sideways may be in order for a few days but overall the chart will want to roll over and head lower moving forward which would create negativity for the XLF as well. 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. Note Added 12/5/12 at 5:14 PM: Huge 6% move higher today. C canned 11K employees today and both C and BAC were goosed. This creates the stutter step move but it was a push higher rather than sideways. Let it settle a few days but the same basic analysis should hold despite the rocket launch today.
KS, question about this chart. If the MACD, Stoch, and Money Flow are sloping upwards (your green lines), what does that mean? Why is it still negatively diverged? Doesn't that mean there will be a higher high before rolling over? Thanks for all you do in educating us amateur traders.
Yep Anon, you have the right idea. The red lines for the indicators show negative divergence, price is higher but the indicators are all lower when comparing the same points in time. This is over the 3-month time frame with the rising wedge as well, all bearish.
Then in the shorter time frame the last couple weeks the green lines show long and strong behavior where they want price to eek out a higher high over the coming week or two, then the 3-month neg. div. should kick in to start creating stronger weakness. So price may bump along at these levels for a week or two and then should roll over, and collapse out of the rising wedge.
KS, question about this chart. If the MACD, Stoch, and Money Flow are sloping upwards (your green lines), what does that mean? Why is it still negatively diverged? Doesn't that mean there will be a higher high before rolling over? Thanks for all you do in educating us amateur traders.
ReplyDeleteYep Anon, you have the right idea. The red lines for the indicators show negative divergence, price is higher but the indicators are all lower when comparing the same points in time. This is over the 3-month time frame with the rising wedge as well, all bearish.
ReplyDeleteThen in the shorter time frame the last couple weeks the green lines show long and strong behavior where they want price to eek out a higher high over the coming week or two, then the 3-month neg. div. should kick in to start creating stronger weakness. So price may bump along at these levels for a week or two and then should roll over, and collapse out of the rising wedge.
Price is likely closer to falling in the days ahead rather than a week or two. Say, at anytime. Perhaps the banking sector will receive bad news?
ReplyDelete