SPX Weekly Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Developing

The smack down to begin the year was an easy call with the overbot conditions and universal negative divergence. The bulls are relentless, however, fueled by the Fed and other central banker easy money, and continue printing new all-time highs. Despite the QE tapering, the Fed continues to goose the stock market at $45 billion per month. Note the last time that price touched the lower standard deviation band (pink circle) was November 2012. This is very atypical and unusual market behavior and clearly the reason that markets do not properly correct is the central banker intervention.

The red rising wedge, overbot conditions and universal neggie d across the multi-month time frame is holding in place and wanting to see lower prices for the weeks and months ahead. Money flow is cooked with neggie d  in all time frames. In the VST, however, over the last month, with the strong performance in May, the bulls are creating short term long and strong juice (short green lines) and also have created a positive MACD cross. The move higher over the last couple weeks is on very light unimpressive vapor for volume.

The expectation is for choppy sideways behavior ahead; a pull back but then a price recovery again due to the VST momo but the multi-month negative divergence should win the day creating sideways to sideways lower prices for the weeks and months ahead. Note that the apex of the rising wedge allows a price move to 1925-1950 before a collapse out of the wedge would be expected. Price is at the upper band and extended above the moving averages requiring a mean reversion lower. Overall, the projection is sideways to sideways lower moving through 2014. The bears need to reverse the MACD cross, otherwise, the bulls will keep extending the market buoyancy. 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.