That is a wicked rising wedge on the SPX weekly chart. The collapses from rising wedges can be quite dramatic. Stochastics are overbot wanting to see a pull back in price. The bulls are sneaky, however, and they are pumping that RSI higher which will create higher highs in price on the weekly basis. The MACD line is also long and strong wanting to see another higher high for price after a pull back occurs in the weekly timeframe. The histogram, stoch's and money flow are all negatively diverged wanting to create that pull back now. The money flow has some short-term upside momo. This behavior hints at some jog behavior such as down for a week, then back up for a week, then down for a week then perhaps up another week, and once the indicators are lined up with neggie d across the board, then price falls for extended down. The way the chart is now, the top would likely be two to three weeks out with a dip in between but the chart can be updated as it evolves.
Price has violated the upper standard deviation band (pink) so a move back to the middle band is on the table at 2215 and rising. This is interesting. There is a lot of spaghetti on the chart but looking at the pink standard deviation lines and the middle purple band, which is also the 20 MA, count the weeks it takes for price to return to the middle band after it makes the move towards an outer band. In Aug-Sept 2015, price round-tripped to the middle band in 9 weeks. In early 2016, it traveled for 11 weeks. In spring 2016, about 15 weeks, from June-Sept 2016 price traveled for about 13 weeks. What does all this mean?
Price has violated the upper band currently and it moved above the middle band back in early November. So price is above the 20 MA middle band for 13 weeks. The maximum time over the last two years is 15 weeks before price had to come back to the middle band. Price would plummet to 2215 over the next 2 weeks to satisfy this criteria. In other words, price has been extended above the middle band for the longest time in over two years, so it makes sense that price is going to need to retreat fairly soon and that middle band at 2215, and rising, is the target.
The RSI is key so watch that closely to see if it sneaks higher above 70 into overbot territory, if so, that may extend the time it takes for the S&P 500 to roll over. Respect that rising wedge. It would not be surprising to see an epic fail from that wedge easily into the 2050-2150 range very quickly, say in March. Watch the RSI and MACD line for when they negatively diverge; that tells you the top will be in on this weekly basis. The SPX monthly chart remains negatively diverged across all indicators so the last breaths in the weekly here, say into March may be the top for stocks; a multi-year top. 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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