SPX Daily Chart New All-Time Highs Channel Breakout Overbot Rising Wedge Negative Divergence

The SPX prints a new all-time record intraday high at 1912.28 and new all-time closing high at 1911.91. Interestingly, 191191 is a palindrome. Last week we were watching who would win from the standard deviation band squeeze (pink lines and arrows) and the bulls win. The pink circle shows the bull and bear fight for control but the bulls won out moving from 1860-ish to 1912 over the last week, a 50-handle move and nearly +3%.

The 3-1/2 month sideways channel through 1816-1897 (brown lines) results in a breakout to the upside. The bearish red rising wedge remains in play with price nearing the upper trend line. Price has violated the upper standard deviation band so a move back to the middle band, the 20-day MA at 1884.70 and rising, is on the table. Three trading days remain in May and the month started at 1883.95. The 1884 level is also strong support so a confluence of support is in place at 1884-1891.

Negative divergence remains over the multi-month time frame (red lines) but the bulls are developing short-term momo. Stochastics are overbot. Volume remains below average and surpassed the buy days last week, however, volume is lower than the one selling day last week. Price is enjoying the jump higher from the tight standard deviation bands. The SPX needs to back kiss the 20-day MA since this is critical S/R but also since the upper band was violated. The question is does the move lower occur by Friday to tease at creating a negative month under 1884, or, does the SPX simply print a positive month for May, remaining elevated this week, and back kiss the 20-day MA next week? Markets may stumble sideways into next Thursday, 6/5/14, when ECB's Draghi will bring the tablets down from on high and tell global markets which way to go.

Overall for the weeks forward, the chart is bearish due to the rising wedge, negative divergence and overbot stochastics, however, in the VST, the bulls are creating momo so a move through 1897-1920 may occur into the first week of June. A back kiss would be needed to the brown line, the top rail of the channel where the break out occurred, at 1897-ish. If bears are going to make a run at creating a negative month for May (under 1884), they have to begin the trek lower today without delay. If markets finish flat or higher today, the month of May will likely end positive on Friday. 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.