SPX Daily Chart Tight Bands Rising Wedge Negative Divergence Price Extended

The drama around the tight standard deviation bands (pink) continues. The prior tight squeezes in May and July (one up and one down) result in 80-90 point moves in the S&P. The tight band squeeze does not predict direction it only forecasts a strong and powerful move one way or the other. Going into Friday morning with the BABA hype and up futures, the SPX bounced at the open and it appeared the bulls were christened with the strong upside squeeze. Not so fast. Bears decide to put up a fight and create Friday's doji candlestick that typically indicates a trend change.

The tight band squeeze theatrics continue. Price is paused at the upper band. If the bears want to create a sharp down move from the squeeze it has to start on Monday, otherwise, the bulls will continue the upside orgy to 2020-2060. The red lines show a rising wedge pattern (bearish) and firm negative divergence for the last four months across all indicators. Price is exhausted and the stocks were sold off on strong volume from the Friday top (although the Quadruple Witching OpEx and index rebalancing created much of the volume).

Price is now above the moving average ribbon above the 20-day MA, above the 50-day, above the 200-day, so a mean reversion will be needed back to the downside. Money flow and stochastics are trying to squeeze out some more upside juice in the VST but if successful it should only be a one to three day event at best. The bulls looked like non-stop winner to 2050-ish last Thursday but are now stalled. Monday is a very important day for markets. Bears have to maintian the negative MACD cross (purple circle). If the MACD cross turns positive, the bulls are off and running higher. 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.