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Sunday, January 6, 2013
SPX Weekly Chart Negative Divergence
The red arrows show the previous negative divergence spank downs. A matching high in price occurred on Friday, this locks in the negative divergence over the last four months. However, due to the overwhelming bull orgy last week, note how the RSI, stochastics and MACD line are eeking out higher highs. This hints that the momo will want to see these price levels again after a smack down occurs due to the negative divergence now in place. Thus, the projection in the right margin forecasts a path forward where the SPX will receive a pull back in the days or week or two ahead, but this couple-week long and strong behavior will want to see price come back up to the current levels, at that time, the indicators should be in universal negative divergence across the four and five month time frames as well as the couple-week time frames, which would result in a much stronger move lower. Note how price highly respects the 20-week MA at 1423.34. 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.
KS, am I correct in thinking there have been very few pre-announcements leading up to the first earnings reports this week (from Alcoa, Phillips, Monsanto, etc.)? Why the silence? Does it mean the reports will be generally in line with expectations? (I would think many of the revenue projections should be coming down.) Perhaps some earnings disappointments will lead to a slight correction next week - maybe after Alcoa on Tuesday AH. (Thanks to Ben, does anyone even pay attention to things such as earnings, book values, cash flows, capital investments, etc.? LOL.)
They have been a bit sneaky over the last couple months, many tech companies have lowered estimates but they did it pre-confessional season to perhaps call less attention to themselves. It is hard to draw conclusions from this stuff since the beat-the-penny philosophy has been in place for decades. Overall, the bar was lowered just as it was last quarter, so companies should be able to meet EPS. Keep watching top line revenue like last season, since lower sales will indicate trouble. It is easy to meet EPS since you simply drop-kick a few employees to reduce expenses and bump the bottom line higher, but the top line, the sales are either there, or not. Then the top importance is the guidance. So double A will see a lot of hooplah on Tuesday when they announce what they think 2013 looks like.
Financials and banks exploded higher on Friday due to rumors and news about great bank earnings on the way. The charts do not show this, charts are setting up much less favorably, XLF is negatively diverging. Then, after the close, there was an article about how the financial earnings may not be as good. It's a circus.
Sorry KS, but this is a too bearish interpretation of the charts IMHO. I see a buy signal in the MACD above the zero line; bullish! Negative divergence during a bull run is normal. Wait till the MACD turns negative; then we're talking. FSTO just flipped to buy again mid-level: bullish. Massive bullish engulfing weekly candle: bullish. 8d SMA above 34D SMA: bullish! I can go on and on. . Ever since the '09 low we've had higher highs and higher lows. Each dip was 8-10% down tops and the bears were always screaming: this is the big one down... Never happened. It will when nobody is bearish anymore! How long does it take to realize we're in a bull run!? When we're at record new highs!!! but then it is too late. this market has all the hallmarks of a bul run but nobody wants to see 'em for some reason. Typical of a bull run too!! See y'all at 1550+ in ~2 months. Dips should be bought.
KS, am I correct in thinking there have been very few pre-announcements leading up to the first earnings reports this week (from Alcoa, Phillips, Monsanto, etc.)? Why the silence? Does it mean the reports will be generally in line with expectations? (I would think many of the revenue projections should be coming down.) Perhaps some earnings disappointments will lead to a slight correction next week - maybe after Alcoa on Tuesday AH. (Thanks to Ben, does anyone even pay attention to things such as earnings, book values, cash flows, capital investments, etc.? LOL.)
ReplyDeleteThey have been a bit sneaky over the last couple months, many tech companies have lowered estimates but they did it pre-confessional season to perhaps call less attention to themselves. It is hard to draw conclusions from this stuff since the beat-the-penny philosophy has been in place for decades. Overall, the bar was lowered just as it was last quarter, so companies should be able to meet EPS. Keep watching top line revenue like last season, since lower sales will indicate trouble. It is easy to meet EPS since you simply drop-kick a few employees to reduce expenses and bump the bottom line higher, but the top line, the sales are either there, or not. Then the top importance is the guidance. So double A will see a lot of hooplah on Tuesday when they announce what they think 2013 looks like.
ReplyDeleteFinancials and banks exploded higher on Friday due to rumors and news about great bank earnings on the way. The charts do not show this, charts are setting up much less favorably, XLF is negatively diverging. Then, after the close, there was an article about how the financial earnings may not be as good. It's a circus.
Sorry KS, but this is a too bearish interpretation of the charts IMHO. I see a buy signal in the MACD above the zero line; bullish! Negative divergence during a bull run is normal. Wait till the MACD turns negative; then we're talking. FSTO just flipped to buy again mid-level: bullish. Massive bullish engulfing weekly candle: bullish. 8d SMA above 34D SMA: bullish! I can go on and on. . Ever since the '09 low we've had higher highs and higher lows. Each dip was 8-10% down tops and the bears were always screaming: this is the big one down... Never happened. It will when nobody is bearish anymore!
ReplyDeleteHow long does it take to realize we're in a bull run!? When we're at record new highs!!! but then it is too late. this market has all the hallmarks of a bul run but nobody wants to see 'em for some reason. Typical of a bull run too!!
See y'all at 1550+ in ~2 months. Dips should be bought.
Arnie