SPX Daily Chart Upward-Slopng Channel Potential H&S Consecutive Alternating Down-Up Days Continue

The streak of alternating down-up-down-up days continue now at 14 days in a row. A down day today, 4/9/13, would continue the streak to 15 days. The bulls continue to frustrate the bears over the last two months. The purple bars in late January and early February show an H&S forming but the bulls punched higher with the right shoulder negating the pattern. Ditto the brown bars in February. Ditto the maroon bars in mid-March, which now brings the SPX to the light blue lines which is now forming the right shoulder as a result of yesterday's recovery. The head at 1574, neck line at 1547, targets 1520 if the 1547 fails. The intraday low on Friday is important support as well at 1539-1540 for the potential H&S so a head at 1574 and neck line at 1540 targets 1506 if the 1540 fails.

The upward-channel was defended by the bulls yesterday. Note how price failed the lower rail of the channel on Friday to print the low print at 1539-1540, but price recovered back up into the channel. The bulls realize the negative consequences of a closing print under the channel so the SPX was goosed to keep it within the safety of the channel. A sideways channel through 1547-1574 is in play for the last five weeks and a channel through 1540-1574 for the last six weeks. The red lines clearly show the negative divergence spank down finally giving the bears the nod. However, the bulls keep printing money. The Fed's QE4 Infinity and Beyond is powerful. Then money fleeing Europe provided a further goose to prices over the last month. Now Japan's money printing is flooding the world with more dough that seeks a home somewhere. The dividend stock bubbles are growing ever larger, utilities are parabolic, many other sectors such as REIT's and healthcare are overextended.

The indicators are agreeable to markets weakness moving forward. The money flow is creating some short term upside momo for the next day or two. Note how the RSI and stochastics were ready to lose the 50% levels to lock in the bear path, but, alas, the bulls fight back and ruin the bear party. The fight for the 20-day MA at 1558 is key and that was a big win for bulls yesterday, and once it was clear that price would stay above this moving average, the bulls quickly tacked on five more points. The blue boxes show the volume distribution days continuing. The larger volume down days following the up days is the smart money distributing stock to the dumb money. The bulls are resilient. Stock trading is not what it used to be due to the central banker intervention, but like all prior QE's, the current central banker moves will run out of gas as well.

Watch the right shoulder formation for the potential H&S pattern to see if it forms, or, if the bulls simply drive up higher through 1574 to once again negate the pattern. The 20-day MA at 1558 provides an immediate tell of who is winning; bulls above, bears below. Watch the lower channel rail at 1550-ish; a close below is bearish. The 50-day MA at 1532-1533, moving higher, will come into play as the days move forward. The 50-day has not been tested for almost four months so price needs to come down for a look at this critical support. Projection is lower numbers moving forward but the bulls keep finding a way to extend the rally. 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.