SPX 2-Hour Chart Negative Divergence

The bulls keep floating markets higher on light volume and with the higher price moves, the indicators are going to float higher as well. The RSI remains in a long and strong profile so it wants to see another higher high in price again after a pull back occurs. This is a repeat of yesterday's action. Futures show some slight weakness on tap but the Fed's money pump enters between 10 AM and noon which should create higher highs. At that time check the RSI since it should finally set up with negative divergence to kick off the downside. Since a couple handles at a minimum will be needed to create the lower low for the RSI, as price makes a higher high, that is 2 to 4 hours of time, which would be lunch time today. The 30-minute and 1-hour charts are all set up negatively right now so they do not require any new price highs. The 2-hour chart is stubborn and the bulls best friend to start the day.

The brown inverted H&S pattern shows head at 1488 and neckline at 1525 so the target is 1560-1562, only four points away. A touch of 1560 would satisfy this pattern. Watch the RSI. When it sets up with negative divergence over the coming hours, that will lead the way lower and finally give the bears a chance to growl although the growls have been meow's so far this year.  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 3/12/13 at 10:19 AM:  The SPX drops at the open, then pops, no surprise. A new high for 2013 is printed at 1556.77 so pay attention to that number today. With the higher high, the 2-hour chart is now exhibiting negative divergence for the RSI. Give it another candlestick, which is two hours, but the hourly and minute charts are now fully agreeable to usher in market weakness. Today is Tuesday of OpEx week so a Tuesday low typically leads to a Wednesday high.  The weakness through the new moon occurs again as usual each month albeit only slight weakness from yesterday's high to today's low. There remains a full day of trading ahead so lower lows may be on the way. In addition, the seasonality for this week must be considered since this OpEx week in March markets are typically up for the week over 80% of the time, so this factor must be respected. So how this puzzle fits together remains a mystery with four days yet to play out this week.  The starting number for this week is the palindrome 1551. Thus, if the week closes at 1552, that satisfies the up week seasonality. First thing is first, watch to see if the RSI maintains its negative divergence on the 2-hour chart which signals down ahead. The 1557 this morning is close enough to the 1560 target to satisfy the inverted H&S pattern if the markets choose to roll over here for some downside. If the 1560 is achieved it will likely occur before lunchtime. Copper, oil and commodities are up today recovering from the lows over the last couple weeks which encourages the bulls, however, this asset relationship remains twisted. The markets were expected to go down with lower commodities since this indicates a slowing global economy and disinflation and deflation, but, the markets instead move higher, fueled by the thinking that the U.S. economy is experiencing a strong and robust recovery and the lower commodities is wind at its back, so equities rise.  With commodities moving higher today it will be interesting to see how equities perform.

Note Added 3/12/13 at 10:36 AM:  The 8 MA on the 30-minute chart is 1555.29 so the bears need to see prints under 1555.29 to pull the 8 MA lower towards a cross down through the 34 MA.  If the bulls can stay above 1555.29, they are cruising with their feet resting on an ottoman. Looks like the negative divergence spank down for the SPX may be appearing. The 10-year yield is 2.03% dropping a wee bit favoring equity bears. TRIN is 0.76 so bears do not have gusto until the TRIN moves towards 1.00 and higher. VIX is 11.88 and should recover above 12 in the time ahead which will aid the bears.