SPX Weekly Chart Overbot Rising Wedge Negative Divergence
Keystone usually posts the weekly chart once per week. We have watched the negative divergence set up as price floats higher. This is a very pretty, and negative, chart. The red rising wedge is textbook. Each pull back is created by negative divergence smack downs. Each top occurs with overbot conditions in the stochastics and overbot or near overbot RSI and money flow. The pesky action lately provides some short term momo (short green lines) for the indicators so a sideways move for three weeks is easily doable (like prior tops) but a roll over is at the doorstep. The Energizer Bunny keeps motoring higher but the chart says down and considering the rising wedge, the down should be substantial. The action this week thus far prints a doji candlestick which hints at a trend change. Projection is a roll over to occur with the SPX moving back into the 1300's by the time the Easter Bunny comes to town. That would be just as spectacular as the 150-handle ride up since mid-November, a 150-handle ride back down. 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, your TA is great! I appreciate all the updates you provide for us here. However, because Uncle Ben continues to print $$$$$ to keep the market flowing upward, like you said, 10 to 11 AM the market starts ramp up and grind a little higher each day goes by. We see this 7 days consecutively high high high. How can you justify the down to 1300's in a couple month?
ReplyDeleteDo you think Ben will stop printing money?
Thx!
Anon, you are dead on, that is the 'do not fight the Fed' mantra which is typically the case. The negative divergence and overbot conditions are key. As seen above the roll over may take another month but it should come. Since everyone knows that the Fed is in there supporting markets it eliminates the need or desire to short which is occurring now. With the short squeezes catapulting stocks 10, 20 or 40% or more in a heartbeat, this is rocket fuel sending the broads higher, however, ringing out the shorts chases away all sellers. Incrementally, the squeezing can continue but this creates air underneath.
ReplyDeleteIn the 1987 top, markets exploded higher during the blow off and this last move, that many traders were tripping over themselves to enter, resulted in a fast reversal wiping out all those long trades in the time it took for the trader to return from the john. Markets take the stairs up and elevator down. Complacency is rampant. Optimism is everywhere, world leaders say everything is fine day after day.
But in a nutshell, to directly answer your question, negative divergence. If the charts were long and strong and halfway thru the long term run-ups, being long would be the place, however, at overbot conditions and neg. div. on monthly, weekly, daily, hourly and minute charts, that is really the tell. The roll over may start today, or we stumble sideways for say three weeks or a month before rolling over. Today the 1505 will likely dictate whether or not the 1520's occur. At this point the 1520's probably will, but we may need to go down to 1460 first, then back up, then down. Rising wedges are wicked patterns, there is some further room that can create the 1500+ numbers say into spring or early summer, after a sell off occurs, but once a rising wedge breaks a large move down is expected not a small pull back and that would likely send things to the 1300's. Things are all going the bulls way right now.