SPX Daily Chart Upward-Sloping Channel Negative Divergence Elevated Price Levels Above 200 MA

An upside melt-up occurs yesterday due to the triple whammy effect of Fed and BOJ easy money as well as money fleeing Europe.  The SPX and Dow Industrials are receiving the benefit atop every other index around the world. The world indexes remain lackluster as the flood of money continues to fuel the U.S. dividend, blue chip, utilities, consumer staples, REIT's and high-yield corporate bubbles. The arrows show the negative divergence spank downs as expected but the central banker money-printing causes traders to buy all dips and believe that higher stock prices will continue forever. Price broke up through the sideways channel at 1540-1570, a 30-handle range, that has been in place for six weeks so a back kiss would be in order.

With the new all-time intraday and closing highs printing occurring in the SPX, the indicators remain unenthusiastic and negatively diverged. Contrast this behavior with the rally from November through late January where long and strong indicators pointed to higher and higher highs. The behavior over the last three days creates momo for the RSI and stochastics that will want to see some matching or higher highs in the days ahead. The money flow was not impressed with yesterday's upside orgy, moving flat. The MACD line and histogram remain negatively diverged through all the euphoria.

Note the poor buying volume over the last three days despite the higher highs in the SPX. None of the last three day's volume is able to surpass the two sell days last week. The selling volumes are running above a day's average volume while the buying days consistently run below an average day's volume. The green dots illustrate the elevated price levels above the 200-day MA, an indication of an overextended market. The green dot on the left-hand side is 127 points above the 200-day MA, the center dot is 140 points above the 200 and the dot on the right, now, is 144 points above the 200.  Price is at the highest elevated point above the 200-day MA for the entire history of the rally from November. The moving average ribbon shows price above the 20-day MA above the 50-day MA above the 200-day MA indicating that the price is very over extended.

Regardless, the central banker money continues to pump markets higher. The reversion will occur, it is simply a matter of when. The momo in the RSI and stochastics can create futher highs but the SPX is far extended and a pull back to the lower rail of the channel, at a minimum, would be expected in the days ahead. 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.