SPX 2-Hour Chart Fibonacci Retracements Upward-Sloping Channel Negative Divergence Developing

At last look at the 2-hour, we saw long and strong indicators signaling higher highs for price ahead, which are occurring. Price fills the juicy gap shown on the daily chart at 1966-1970. A gap remains open at 1986-1987. The negative divergence continues to set up (maroon lines) but the MACD line remains long and strong wanting higher highs in price after any near-term pull back. Remember, these are two-hour candlesticks; two-hour trading blocks of time. The money flow is negatively diverged across the one-month time frame but the bulls are sqeezing out more near-term juice. Thus two to four candlesticks are likely needed to place universal neggie d in place to create a spank down in price; 4 to 8 hours of trading which is today into tomorrow.

The key SPX S/R (reference the SPX S/R missive on the weekend) is the 1991 palindrome top, 1988, 1985-1986, 1976, 1973, 1968, 1963, 1960-1961 and 1951. The bulls push up through the 50-day MA at 1957.50 and then up through the strong 1968 R so 1973 R is next and that is where the focus is now. HOD is 1971.51. The Fibonacci retracements at 38%, 50% and 62% are all taken out to the upside. Sometimes a 74.6% Fib ratio is a handy number to reference when the 62% gives way. The 74.6% Fib retracement for the drop from 1991 to 1905 is 1970-1971 exactly where price now sits. If price overtakes 1973 R then the 1976 is next and if that gives way, a test of the all-time highs is next and price will fill the 1986-1987 gap.

Price is tapping on the top rail of the upward-sloping red channel. Since neggie d is in place but not fully, some relaxation in price to the 1968 support is a reasonable expectation for a candlestick or two. Then the long and strong MACD and money flow will want higher highs so 1973 should print today. Since the chart is continuing to set up neggie d and it should be in place this afternoon or tomorrow, the expectation would be that price may meet strong resistance and a near-term top at the 1976 R; call it the 1973-1976 zone. So we will see how it goes. Watch for the MACD line and money flow to curl over.

Markets remain very news-driven and subject to tape bombs at any time. Volatility dropped today under the critical VIX 12.85 level identified by Keybot the Quant, Keystone's proprietary trading algorithm, providing bull rocket fuel. Shorts are running for their lives creating a short-covering rally thrust higher. Volume, however, is light showing a lack of conviction. Market bears need VIX above 12.85 or they got nothing. VIX is currently printing at 12.45. 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.