SPX Daily Chart Negative Divergence Tight Band Squeeze On Tap Bull Flag

Markets are at a key inflection point. The tight standard deviation bands (pink lines) are squeezing in tight and will push out a powerful move in one direction or the other and this move will be apparent by the weekend. On the bull side, the blue bull flag pattern shows leg one from 1770 to 1850, 80 handles, and then the sideways consolidation zone with price moving sideways to sideways lower, then leg two begins at 1820, thus, a target of 1900 for the pattern. Price broke up through the consolidation zone four days ago so the bulls popped the champagne corks, but price drifts lower creating a sloppy flag pattern, that could lead to nullifying the pattern. If the tight bands squeeze out an upside move, the bull flag pattern will lead the way higher. Most importantly, on the bull side, is the BOJ and Fed that control the markets. So watch the dollar/yen, up and stocks go up, down and stocks go down.

The chart is much more friendly to the bear case. The circles for the volume candles show distribution taking place for the last month with the funds distributing stock to Ma and Pa Kettle that are showing up to hold the bag. The red lines create the spank down to begin the year but the RSI wanted to see another price high. Price came back up for that slightly higher high, and the maroon lines show another negative divergence spank down last week. But the BOJ and Fed keep on printing money making their wealthy friends wealthier and overcoming the chart negativity. Yesterday's long doji candlestick illustrates the ongoing drama clearly. A big fight between bulls and bears over a wide price range with price ending in the center unable to choose a side. Note how price prints another near-matching high yesterday, in essence a triple-top, with the blue lines showing all indicators are weak and not at all enthusiastic about price moving higher.

The 20-day MA at 1836.67 is a key metric to monitor. Bulls win above. Bears win below. The tight bands are about to squeeze out an important move. The market action may become intense from here into the weekend. Perhaps even by the closing bell today it may be obvious which side wins moving forward, but definitely by the weekend. If the bulls charge forward they will be moving to 1880-1900. If the bears receive the nod they will move price downward to 1808 support and sub 1800. Projection is for the bears to receive the nod and for price to break lower but, as always, it depends on the central banker shenanigans. As long as the dollar/yen stays flat to moving lower, now at 104.30, the bears should push equities lower moving forward. The SPX weekly chart remains negatively diverged across all indicators wanting to see lower prices for the weeks 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.