SPX 10-Minute Chart Sideways Channel Inverted H&S C&H

Lots going on in the 10-minute chart, so much so it looks like a dish of spaghetti. The blue lines show the 3-day sideways range through 1686-1700. Bulls win above 1700. Bears win below 1686. The red dots show the price extension to the downside so a reversion upwards was needed while the green dots show the price extension to the upside so a reversion downwards was needed. The red lines show the negative divergence spank down for the last couple hours yesterday. The RSI and MACD is weak and bleak wanting to see more lows but the stochastics and money flow are positively diverging. The S&P futures point to a lower open so it would not be surprising to see the stoch's and money flow drop and take on the weak and bleak profile as well and the price move through the sideways channel range continues.

The green circles show where the Fed enters each morning to pump the stock market higher with the POMO pumps. The BOJ will chime in as well and weaken the yen, sending the dollar/yen currency pair higher, which sends stocks higher. The Fed POMO link is provided in the right margin below on this site. Tuesday 8/6/13 saw 4.75-5.75 billion in purchases, Wednesday was 1.25-1.75B and yesterday 2.75-3.50B. This is why traders are complacent and have no fear. Chairman Bernanke says 'QE Infinity' where the propping of markets will continue non-stop and forever, however, we all know this will not happen. Fed members are all singing from the same hymn book about tapering beginning in September. The Fed knows that QE is not helping the economy, it is only creating new asset bubbles such as the Dividend Stock Bubble, and it will also create more pain down the road when everything unwinds. These reasons are why the Fed will taper in September, as well as Bernanke trying to clean up his tenure before he departs in January, the Fed has no choice, they already did enough damage. Average Joe has suffered the last few years but the Fed makes the wealthy wealthier and saved all the big banks which are now even bigger. There is no velocity of money so the QE programs made the rich richer and the poor poorer.

The brown lines show an inverted H&S and light blue lines show a C&H within all the spaghetti and both patterns would target 1715 if 1700 is taken out to the upside. Interestingly, there is no POMO pump today, but watch the 10-11 AM hour anyway, since there are other ways the Fed pumps, and the BOJ may help out today so watch the dollar/yen today. Moving forward, if the September taper does occur, will the morning QE pumps simply lessen in their oomph, or, will traders consider any pull back in QE to signal the official end to the big easy money party with everyone cashing out, gittin' outta Dodge, and runnin' for the door at once? The Fed backed themselves into a corner now and are trying to put on a brave face. 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.