SPX Daily Chart Upward-Sloping Channel Upper Bollinger Band Violation Negative Divergence

The daily chart shows the two previous intraday highs for the SPX at 1474.51 and 1470.96 (pink circles) which may create drama this week. The upper BB has been violated for three days running, something you do not see that often (pink circle). Once the upper BB is violated price wants to move back to the middle BB, which is also the 20-day MA, now at 1430.41, at a minimum, and many times price prefers to travel to the opposite BB, now at 1397.  However, note the action in September when price violated the upper BB, price continued running up the upper BB for another 30 or 40 handles.  The December top shows a one-day reversal immediately after the upper BB was violated.

The red lines show the negative divergence now in place although the recent momo has created a desire for price to jog up and down before rolling over. The stochastics are overbot for over one month, the RSI is not over 80% so bulls will be hoping to see the RSI move higher to indicate continued higher prices ahead. The blue lines show important S/R at 1485, 1476, 1472, 1468, 1460-1461, 1444, 1441, 1433-1435 and 1419.

The skinny green box shows the slope of the 150-day MA flattening which had started to indicate a cyclical bear market taking hold (this is one of Keystone's cyclical indicators).  However, as the 150-day MA flattened and started to turn negative, bingo, the two-month rally has now sent it sloping strongly higher. This is a bullish indication until the moving average flattens and rolls over which will indicate major trouble ahead for markets. The volume over the last days with this euphoric move higher shows decreased interest. The volume on Friday was only 3/4ths of the volume on Wednesday's large market move. Far greater buying interest would be expected for a strong market ahead, especially as the new money comes to market right now.

Considering the upper BB violation and the negative divergence, price should jog across 1465-1475 and roll over down to 1430 as the lower target in the near term. A huge game changer would be if the bulls take out the 1475 September high. That places the strong 1485 resistance as the last chance for bears to hold back the bulls, if 1485 gives way, the 1500's will follow, likely up into the 1520's for starters. Bears will start to regain momo if they can push down thru 1459-1461. 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.