The Fibonacci retracements (if price pulls back today) are shown in blue. Of course if the SPX moves higher, new Fibonacci retracements will be required. The first retracement at the 38% Fib is 1520, the very strong S/R at 1520, so this level carries clout. The lime green squares show the distribution days occurring where the selling volume is the same or greater than the previous days up volume. The funds and hedgies will distribute their stock as Joe Sucka becomes excited about the markets and wants to be involved. Note that none of the last three days volume, for the three big up days (a 40-handle move from intraday bottom to top), is greater than the selling volume four days ago. Watch today to see if a pull back occurs, if so, see if the selling volume is above the last three day's volume, or not.
The red lines show negative divergence and overbot stochastics. Price makes a new high but the indicators are not enthusastic. The RSI, MACD and stochastics do show short term momo over the last couple days due to the thrust higher so a jog move may be required before a more substantive down move occurs. This action would be in line with the projections by the pink boxes. The projection is a couple days of sideways to digest the upside energy but come Monday the SPX may be at the 1515-1525 area, however, these markets can only be studied from hour to hour and forecasts adjusted as the drama unfolds. 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.
Just a quick question/comment -
ReplyDeleteI read the texture of your last several posts as anticipating a significant retracement in the very near future.
Divergences exist until they don't; we see charts morph all the time.
With the thrusts on the McClellan Oscillators within the risk-on sectors (XLY, XLK, NDX, etc) pushing past the Jan & Feb highs, wouldn't sideways (far more sideways than 1525) be likely for the next digestive cycle?
Trying to see both sides..
Steve, that is certainly a true point, 'divergences exist, until they don't', just like trends, so it definitely has to be kept in mind. Typically, if the negative divergence action is occurring with overbot RSI and stochastics, however, it is reliable since any move higher would be limited and likely result in only stronger neg. div. But the charts with indicators barely at the overbot levels definitely pose a more difficult case. The monthly and weekly charts exhibit the rising wedge behavior so a stronger collapse would be more in tune with what is expected out of the rising wedge patterns. The markets are very difficult now due to the Fed intervention. There is likely not much fear in the markets that a 5% or more pullback could occur in something as fast as two or three days, that is why it is good to keep that in mind. Especially an overnight event that creates lock limit down where anyone long the markets are stuck long. There are many points to reinforce both the bull and bear case. Perhaps moving through the central bankers and employment report and stress tests over the next couple days will provide clarity. And the FOMC on 3/20 definitely will provide clarity, so it looks like the markets will at least make a more firm directional decision sometime in the days ahead. The bulls would need a pick up in volume which would create upside oomph.
ReplyDeleteWin rate/probability 70%-90% range. As such, we like STO 158/160 bear call spread
ReplyDelete