SDS Ultra Short S&P 500 2-Hour Chart Oversold Falling Wedge Positive Divergence

The drama with the SPX 2-hour chart continues with the indicators negatively diverged except for the money flow over the last few hours. Therefore, another 1 to 3 hours may be needed to plant the market top. The SPX has been moving sideways at these levels for over one day.  For a different perspective, the SDS 2-hour is shown above. SDS is an ETF that is a double inverse for the S&P 500. In other words, if the SPX goes down -1%, the SDS goes up +2%. On the other side, if you own SDS and the SPX goes up +1% you are slapped silly -2%. SH is a single ETF inverse play that moves one to one rather than the two to one.

The SDS chart above is positively diverged across all indicators (green lines) which is not surprising since we see the S&P 500 (SPX) chart negatively diverged (except for money flow still wanting some upside). The charts are mirror images of each other since they move inversely. Price is extended below the moving averages requiring a mean reversion higher (higher SDS = lower stocks). The falling green wedge and oversold conditions are two more feathers for the market bear's hats (SDS bulls). The expectation would be for price to bounce from here beginning at any time over the coming hours; it has a strong chance of moving higher before the end of the session. That means stocks should sell off. It will be interesting to see what happens.

If stocks keep moving higher, the same analysis should hold. Stocks are typically bullish during the Fed testimony and this has come true. Interestingly, during last July's testimony, the day before, and both days of the two-day meeting, were all bullish, as would be expected, but the day after the two-day meeting  the SPX dropped 30 handles. February typically finishes weak which would be tomorrow and Friday. Typically when a month is up wall to wall, like this month, the last couple days are weaker.

A breakout is occurring to the upside for stocks as this is typed with SPX above 2118 at new all-time record highs. High print is 2119.02. The money flow indicator on the SPX 2-hour remains long and strong so the bulls keep finding a way to keep stocks afloat and inch out higher highs in price. The SPX bounces three points in fifteen minutes. WTIC leaps to 50.38 so the energy and oil stocks must be boosting the broad indexes. Keystone opens a long position in SDS looking for a pull back to begin for stocks. The spike move right now is impressive; the bulls are toasting Chair Yellen as they sip the Fed wine. 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 1:40 PM: SPX HOD and all-time high is 2119.59. Energy stocks, XLE, jump +0.7% intraday in only 10 minutes time so the oil move higher creates the broad-market spurt over the last one-half hour. WTIC oil 50.20. Brent oil 60.33. You can see that oil hit 50.50 and 60.60, respectively, minutes ago with the all-time high in stocks printing, so equities are moving with the oil price.