Stocks fell for 7 days into the week of 11/6/16. The green falling wedge, oversold conditions, positive divergence (green lines) and elevated CPC and CPCE put/call ratios conspired to create the near-term bottom and recovery beginning Monday, 11/7/16. The voting occurred on Tuesday, 11/8/16, and in the wee hours of early Wednesday morning, 11/9/16, Trump was announced the victor. From Tuesday evening into Trump's acceptance speech at 2:30 AM EST, S&P futures crashed 110 handles (limit down -5%). Amazingly, by the time the regular session opened on Wednesday morning, the SPX traded flat and then started rallying strongly higher never looking back.
The rally over the last six days in the SPX is a near +6% move with stocks moving +1% higher per day. Traders believe that the orange-head's policies will be inflationary so Treasury notes and bonds are hit (lower prices higher yields) and stocks and the US dollar index rally higher.
Last Thursday, price flattens at the red line while the indicators print negative divergence, and the stochastics are overbot, creating a small spank down. Looking closely, however, you can see that the MACD line is a sliver higher as price printed the high candlestick so this leaves a tiny door open for price to come back up to 2175-2180 for one more look (it is more likely it will not). Price gapped down off the top 16 trading hours ago (8 candlesticks) and then yesterday price came back up to fill that gap.
Price has violated the upper band so a move to the middle band at 2157 is on the table and price tapped it by a hair yesterday. It is a cheesy tap, but close enough for government work. Price may want to tap the 2157 again today. The lower band remains in play at 2133 and rising. The upper band is at 2181 and falling.
Key S/R levels are 2183, 2178, 2175, 2169, 2164, 2133, 2131, 2126 and 2121. The 2133-2152 range is a strong gauntlet of support containing the 20-week MA, 100-day MA, 50-day MA, 20-day MA and 200 EMA on the 60-minute chart. Bulls are okay above 2152. Bears rule below 2133. An epic bull-bear battle occurs between 2134 and 2151.
The 200 EMA on the 60-minute chart is at 2139. This is one of Keystone's VST (very short term) trading indicators. Market bulls are okay above 2139. Under 2139, all hope is lost for bulls and bears will growl strongly, likely testing the 2133 in a heartbeat and perhaps failing lower.
The chart favors downside ahead. The CPCE put/call ratio is very low indicating that a market top is in play and may occur anytime this week. It may be destiny for price to return to the 2130's to see what is going on. If price floats higher due to that tricky MACD line that may not have yet topped out, the indicators will likely remain negatively diverged as the price prints a matching or higher high at 2175, you can check the indicators if this occurs, and if so, that will only seal the fate for a roll over to the downside from there. So the chart hints at a soggy choppy path ahead with a downward bias in this 2-hour time frame, however, as always, if there is a good news soundbite from the central bankers or others, that will create joy. The central bankers have been and remain the market for the last eight years. 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.
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