Wednesday, July 18, 2018

SPX S&P 500 2-Hour Chart; Overbot; Negative Divergence

The SPX was set up with universal negative divergence, overbot conditions and a rising wedge, as the bright red lines show, so a spankdown was expected, which occurs but Federal Reserve Chairman Powell rides in to save the day on Tuesday creating the Powell Rally. He talks up the economy and the gradual rate hike path ahead while at the same time providing a nudge, nudge, wink, wink, know-what-I-mean glance at the cameras willing to become dovish if needed (purple box). The central bankers are the market.

In addition, during OpEx week, a Tuesday low typically leads to a Wednesday high so professional traders were buying the Tuesday dip to ride it into hump day.

So price came up for a higher high which was not required or expected by the chart but charts can only price-in all information known up to the second. The Powell Rally created lift in stocks all day long. So price is at a higher high and the maroon lines show the same neggie d is in play. The expectation remains that the SPX should roll over from here. Powell speaks today in front of the House Financial Services Committee (yesterday was the Senate Banking Committee) but the testimony should be more of the same.

Price tagged the middle band on the last move down and is near the upper band at 2818 which has to be respected. The chart says down but the dip-buyers keep showing up with fistfuls of money. VIX is at 12.29 so the market bears need to see higher volatility to begin a catalyst to the downside. Keystone is holding index shorts looking for the downside to occur.  Keybot the Quant remains long. 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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