SPX Daily Chart Negative Divergence Upper Bollinger Band Megaphone Pattern

There is a confluence of important indicators at 1433-1435, call it the 1430's.  The upper BB is 1435 which, once violated, would hint that a move down to the middle BB at 1411, at a minimum, would be needed. The BB's are tightening as well so a large move in one direction or the other appears to be on hand at any time over the next day or three.  The upper trend line for the megaphone expansion pattern, and the thin upper trend line, also converge on this low 1430's area.  The 1433 and 1435 levels are strong S/R levels as well.  The 1438 level is where the QE3 announcement in early September occurred, and also the top a week ago when Chairman Bernanke introduced QE4.

Price is in a five-week rally with two red rising wedges occurring along the way. The first smaller wedge in late November provided a spank price down but the indicators were in a long and strong profile wanting to see more higher highs.  The red rising wedge in December created another spank down and the negative divergence for the stochastics and histogram provided bear fuel.  The RSI and MACD line, however, still wanted to see another higher high for price, and that occurred yesterday.  All indicators are negatively diverged which want to see a smack down right now but note the MACD line is about to slope up so there may be a little one or two day tease involved yet. The volume participation continues to trail off which is not a sign of enthusiastic bullishness.

Considering the uber complacency shown on the CPC chart, and the TRIN wants to see a pull back, perhaps today will see a stutter step move sideways but a roll over should be on tap from the 1430's confluence as described above.  Of course, any fiscal cliff news, good or bad, will add new information to the game. 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 12/18/12 at 11:42 AM:  The SPX pierced up thru the upper BB this morning, the SPX now above 1441, the upper BB is 1439. This hints that a trip down to 1414-ish (middle BB) is likely required moving forward. The RSI and MACD line moved higher so they have a long and strong profile now and will want to see another price high after a pull back occurs. Thus, a stutter step move thru the 1440's may be on tap, moving down, then back up, then the real decision is made on the strong directional move on Thursday or Friday.  The fiscal cliff decision could be the catalyst.