SPX S&P 500 2-Hour Chart; Positive Divergence Developing; Oversold

Markets are trading marginally higher ahead of the US Monthly Jobs Report tomorrow morning. The red lines show the stock market top we were watching develop over the prior days. So price is spanked lower and does not print an island reversal pattern at the gap (brown lines). Instead, price saunters lower and simply fills the gap.

The green lines show positive divergence developing. The stochastics are oversold but the RSI is not. The green lines show the indicators that are possie d that create the small lift in stock prices this morning. The MACD line remains weak and bleak, although flattening, so it may want to see one more lower low in price before displaying positive divergence and marking a bottom in this 2-hour time frame. The jobs report looms, however, and the chart can change in a heartbeat come tomorrow morning.

Price teases the lower limit of the standard deviation bands at 2360 so the door should be open for a possible move to 2358-2362 today with price currently printing at 2366.66 a few minutes after 11 AM EST. The pink arrows show a tight squeeze on the bands that popped price higher to begin the month. Note how the bands are squeezing in again and may come in tight to set up the epic jobs report as a catalyst for a big market move.

Stocks may stagger sideways without conviction today waiting for the jobs report where the wage number in the release is more important than the headline jobs number and unemployment rate. Inflation, that the Fed has tried to create for the last eight years with their obscene Keynesian spending, cannot exist without wage inflation. Fed Funds futures indicate a 100% chance of a rate hike next Wednesday. If wages lay an egg, Yellen will spend five sleepless nights into the decision day next week.

Traders and analysts are expecting a rate hike but if wages are weak, Yellen knows in her heart of hearts that inflation is not on the come as everyone proclaims and she should not be hiking rates. The FOMC may be about to make a historic and fateful mistake on 3/15/17. Yellen is between a rock and a hard place and may be set up to fail  no matter what she decides. If she hikes the key rate and inflation is not in the cards she makes a mistake and the Fed is exposed as not knowing what they are doing and if she balks at hiking the rate and goes against the 100% consensus that will create angst and a loss of Fed credibility. The tension mounts. 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.