SPX 60-Minute Chart 200 EMA Cross Upper Band Touch Rising Wedge Overbot Negative Divergence Developing

The bulls came to play this week and send the SPX above the 200 EMA at 2035 signaling bullish markets for the hours and days ahead and this joy continues. Bears got nothing until they push the SPX under the 200 EMA. Price is violating the upper standard deviation band so a move back to the middle band at 2051 and rising is on the table. The SPX punches up through the 2061 resistance so 2067 was next and the lower volatility forces price up through this key level so the 2075-2076 resistance is in play next. Key SPX S/R is 2088, 2082, 2079, 2075-2076, 2067, 2061, 2046, 2040, 2038, 2032.

The red rising wedge and overbot stochastics are bearish indications. The RSI is moving into the overbot territory. The red lines show negative divergence in play except for the very short term for the RSI and MACD line. So any mid-day softness in the SPX will reverse and price wants to come up for another high above current levels. This places the 2075-2076 in firm play. About 2 to 4 candlesticks will be needed for the RSI and MACD to flatten and set up with neggie d so that is 2 to 4 hours of trading time that plays out today's session in full. On the SPX 2-hour chart the indicators are exhibiting the same vibe but since that chart is two-hour candlesticks, a 2 to 4 candle time period for it to roll over would be 4 to 8 hours and that would take stocks into Monday morning for the near-term market top.

It may play out with the SPX testing 2075-2076 after lunch today, in the afternoon, which may create the near-term top. Simply watch the chart to see if the neggie d appears for the RSI and MACD. If they remain long and strong, then price will want to keep coming up again after any pull back occurs. The Keybot the Quant algorithm is tracking VIX 16.48 so use that as a key market direction guide. VIX is at 16.13. Bulls win with VIX remaining under 16.48. A signal that the near term top is at hand will occur when the VIX moves back above 16.48 perhaps today. If the SPX is topping at 2075-2076 with neggie d in place on the 1-hr and 2-hr charts, and then the VIX moves above 16.48; down is the market direction ahead. Until then, bulls are going to try and keep the party going into the weekend and will succeed if they keep VIX under 16.48.

As this windbag explanation ends, the SPX is at 2071. Bulls are searching for leftover New Years hats and noise-makers since the mood on the trading floor is joyous and euphoric. Drunken traders, already sipping too much Fed wine, proclaim, "There is no reason to worry since central bankers will pump stocks higher forever." 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 9 AM on Saturday morning, 2/7/15: The SPX made it above 2072 yesterday so the 2075-2076 resistance holds for now. The MACD line on the 2-hour chart rolls over, however, you need a magnifying glass to see if the MACD is sloping downward as the two high candlesticks printed to confirm neggie d. The chart is at least more bear-friendly than Friday morning and consistent with lower price expectations. The big wild card this weekend is the Ukraine peace talks since if an agreement is reached the SPX can easily launch 20 or 30 handles on Monday morning. If the talks fall through tomorrow, and Monday begins with more of the same with fighting in Ukraine on the increase, stocks should remain weak. The VIX shot above 16.48 at lunchtime so you knew stocks would sell off. Bears needed lower semiconductors to keep the downside party going but chips would not crack, hence, stocks moderated into the closing bell. In addition, the VIX was driven strongly lower at the bell. The BPSPX has reversed six percentage points from 60 to 66 providing a market buy signal but a sell signal is also in place under the 70% level. Thus, bulls need BPSPX above 70 and they win big going forward with a double whammy buy signal, or, the BPSPX will drop under 62.20 as next week plays out providing a double whammy sell signal.