SPX 2-Hour Chart Overbot Negative Divergence

The SPX 2-hour chart is all set up with negative divergence except for the MACD line still playing around. The red rising wedge is bearish and there is further room for another move to 1960-1961. The previous 1-hour chart is fully negatively diverged so it hints that the MACD line may simply roll over from here. Key S/R is 1951, 1958 and 1960-1961. The 1958 may be in play where the SPX tops out at any time now. The ROC is already weak and bleak wanting to see lower lows in price after any bounce occurs. The RSI did not reach overbot territory so the confidence in the top would be far greater if it had.

As this is typed, here comes price up above 1956 so the 1958 R is in play. Keep watching to see when the MACD rolls over which should place the near-term top (as long as a positive news event does not occur). If price breaks up through 1958, then the 1960-1961 resistance in play which should serve as a top. The RSI needs to stay under the overbot territory to move the SPX price lower. If the RSI receives a little boost that may extend the upside but a top should occur at any time at 1961 or lower. The way things are now the guess is that the SPX tops here at the 1958 R and rolls over. Use the MACD line as a guide. 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 4:21 AM Saturday, 10/25/14: The MACD line continues to inch higher. Price cannot roll over until the MACD goes neggie d. It is surprising that it did not occur in the Friday session; so it should be Monday. The bulls are receiving encouragement since the bears ran for the hills (as evidenced by the short-covering rally) and keep trying to push the RSI into the overbot territory. The SPX obeys the 1951, 1958 and 1960-1961 S/R levels and then punches up through 1960-1961 in the final minutes of trading. The 50-day MA is 1966.94, call it 1967, and creates magnetic pull on price. The HOD is 1965.27 the last print of the day and week less than two points from the back test of the 50-day. The relief rally is a vertical 7-day spike from the 1820 low to 1965, 145 points, +8%. The central banks train everyone to rely on them and a +8% reward in a few days time will maintain loyalty. Support and resistance is 1960-1961, 1963-1964, 1968, 1973 and 1978. This is an extremely strong resistance area. If price moves into the upper 1970's it will likely go to 2020's. The 1958-1978 area is a strong congestion zone where a huge amount of buying and selling has occurred since early summer. When the SPX dropped in September and October, long traders, fully invested in the Fed, watched in horror as the major indexes teased -10% corrections intraday. The RUT was in correction territory for several days. Then a V bottom occurs and a rocket ride higher due the central banks jawboning and providing stimulus rapid fire starting with the Fed's Bullard, then Yellen, then the PBOC liquidity injection into the banks, the BOJ's ongoing bludgeoning of the yen to pump Japan and US stocks, the BOE, then ECB promising stimulus so the CB's create a +8% rally with magical money printing. The folks that have received a reprieve, however, now that the SPX has returned to the 1958-1978 congestion zone, are thinking long and hard about staying long now that they got their money back. Thus, price would be expected to have a big fight in this 1958-1978 zone. The 50-day MA at 1967 is a critical bull-bear line in the sand. Bulls lock in victory ahead above 1967. Bears growl strongly again under 1967. Bears should be able to roll price over to the downside early next week. However, the ECB bank stress tests are released 7 AM tomorrow morning (Sunday), noon time in Europe, and the Brazilian election results should be available late Sunday evening; both can wildly move equities one way or the other. The Fed has a very important decision to announce on Wednesday so markets may stay sideways in this congestion zone until Yellen brings the tablets down from on high and tells the stock market what to do. The 2-hour chart can be updated before Monday's open. The bears have to be patient. It's not soup to the downside until the MACD goes neggie d.