SPX Monthly Chart Rising Wedge Overbot Negative Divergence Developing

The month of June prints another up month continuing a five-month bull run. The market bulls take a stick and jab it in the beaten-down bears' eye. The monthly chart was set up perfectly for a top but the recent upside juice, even if it is on vapor volume should allow the bulls to keep the markets elevated for a couple months longer. Overall, the SPX monthly chart remains bearish in a topping out process. The red rising wedge remains extremely ominous since the collapses from rising wedges can be quite theatric. The indicators remain overbot and the MACD histogram, stochastics and money flow remain firmly negatively diverged across all time frames wanting to see lower prices right away.

The bulls helped their case in June since the RSI sneaks up for a slightly higher high. This may create another month or three of bull juice, short term only, since the RSI remains under the 2007 top confirming ongoing negative divergence across the multi-year tops. Since the bulls are trying to squeeze out one last bit of juice, the action is remindful of the 2007 fractal. Note how price made new all-time highs in the first-half of 2007, with a negatively diverged histogram, stochastics and money flow, like now, which created a 175-handle air-pocket drop from 1555 to 1380. Note how price bounced off the 20-month MA back then. Price then peaked in October 2007 identifying a historic market top with nothing but trouble following afterwards. Note how the back half of 2007, the peak to peak price move, results in neggie d across all indicators identifying THE top. If the same fractal occurs now, the SPX would drop to 1800-ish in September, then rally into year end back up to the 1980's to end the year, then roll over for extended downside identifying a multi-year top a la 2000 and 2007.

Further comparing the 2007 top, back then a rising wedge was not in play like now. That red rising wedge may be one for the record books looking back two or three years from now. This rally is long in the tooth over five years; like the 2007 top which was 'only' 4-1/2 years, and needs a pull back of size. The projection is lower equities moving forward. The anticipation is that the SPX should move down to the 1730-1800 range (upward-moving 20-week MA support) and perhaps bounce like 2007. The RSI and MACD line want another high in price and the sooner this sets up the better for the bears but it will likely take at least one to three candlesticks (one to three months). This will allow time for a modest down move in stocks, then a recovery in prices, then roll over for extended downside printing THE multi-year top. The scenario's point down. The ride is going to start getting very bumpy from here into the end of the year. Fasten seat belts. The collapse out of the rising wedge may occur at anytime with a dramatic and catastrophic price failure; this scenario is definitely on the table. 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.