SPX S&P 500 Weekly Chart; Rising Wedge; Overbot; Negative Divergence Developing; Price Extended

The SPX retreats last week due to the neggie d with the histogram, stochastics and money flow. The stoch's and RSI are overbot. The red rising wedge pattern is ominous since the collapses from rising wedges can be quite dramatic. The RSI and MACD were long and strong as price printed the high shadow in the candlestick for the record high at 2400 so these two indicators would like to see price come back up again for a matching high so they have a chance to negatively diverge and identify the top.

The guess would be a jog that is down one week, up one week, down one week, up one week and at this time the MACD line should be neggie d and price will begin rolling over for an extended multi-week downtrend. That places the top on this weekly basis at the beginning of April or anytime sooner.

The W pattern bottom shows a base at 1850-ish and breakout area from 2100. That is a 250-point difference so the target for the W pattern after the breakout from 2100 is 2350 which was achieved to satisfy the pattern. The breakouts from W patterns, or say a C&H pattern, typically follow a similar structure. When going long there are three buy points; one at the breakout, then one when price comes back to back kiss the breakout line and then another buy when price takes out the initial breakout high (circles).

The brown lines show a gap at 2351-2355 that will need filling. The SPX is on an island above 2355 and may print an island reversal pattern when price comes down. The S&P is above the moving average lines requiring a mean reversion lower.

The expectation would be choppy sideways for three weeks and as soon as the MACD rolls over with neggie d, stocks will roll over to the downside. On the SPX monthly chart, the indicators remain universally in negative divergence over the last four years, however, the Trump Rally momentum juice carries price higher in the nearer term. The monthly chart would be agreeable to printing a multi-year top anytime between now and say, May or June. The weekly chart will top out as described above so the charts can be reviewed again as they progress

It is likely prudent to keep scaling out of long positions. Once the stock market peaks and rolls over in the weeks ahead, it may not return to current levels for a few years. It will be interesting to watch play out; Keystone will describe the action as it occurs. The Fed rate decision and Chair Yellen press conference is on Wednesday and will move markets; it will be an epic and historic day for the stock market and global economics. 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.