SPX Daily Chart Upward-Sloping Channel Overbot

The bulls keep taking advantage of the strong upside thrust caused by the tight band squeeze (pink arrows). Price has violated the upper band so a move back to the middle band, the 20-day MA at 1907.66 and rising, is on tap. The bulls changed the game late last week because the RSI, MACD line and money flow all became long and strong over the multi-month time frame. This is a bear killer for the several days ahead until negative divergence sets up again. The histogram and stochastics are already satisfied with the current price levels and would prefer to see the SPX move lower but the other indicators want to see more upside bull fun for a day or three or so.

The RSI is now overbot but it may take a few days for it to create negative divergence (so price should recover from any sell off that may occur early in the week). Ditto the MACD line and money flow. At the earliest, one to three days of time would be needed before the indicators are universally negatively diverged so equities may stay in this general 1940-1960 zone this week before placing a top. The bulls should be cats considering all the lives they are given by the central bankers. Projection is for the SPX to likely top out this week and begin a sell off that may become substantive to the downside since the 7-year low in the VIX, 3-year low in the CPCE put/call ratio and SPXA150R above 86 indicate uber complacency and bullish euphoria when markets top out; and a multi-year top for equities remains on the table at any time moving forward.

Price must come down to back kiss the middle band, which is also the 20-day MA, and back test the upper channel trend line, which targets the 1900-1925 zone as an initial downside target once the neggie d forms this week and creates the spank down. 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.

Note Added 10:02 AM: The SPX, Dow and TRAN all print new all-time record highs. SPX HOD and all-time high 1952.31.

Note Added 8:35 AM on 6/11/14: The upside orgy continued on Monday and then Tuesday, yesterday, a slight pull back occurs created by the neggie d on the histogram and stochastics. The MACD line and money flow remain long and strong so after any pull back, price should come back up to the highs one more time before setting up with firm negative divergence across all indicators which will then create a more sustainable path lower. S&P futures are -9 less than one hour before the opening bell. Commodities are key so watch GTX 4990. As equities sell off, if the GTX does not fall under 4990, the bears got nothing and equities will likely recover. The three-week rally created a lot of upside momo that still probably needs a few days to burn off. A day or so of downside would work out well with the full moon hitting on Friday. Equities are typically bullish moving through the full moon so later this week would be a good time for equities to recover and then move to the highs again perhaps for early next week, and then perhaps a more sustainable downside path will emerge going forward starting next week. Housing Starts are next Tuesday and the Fed next Wednesday.