SPX S&P 500 Daily Chart; Overbot; Rising Wedge; Negative Divergence; Price Extended; Upper Band Violation; Federal Reserve Rate Decision and Chairman Powell Press Conference on Tap 9/26/18

The SPX daily chart is set up to pull back and the action on Friday and yesterday provide a taste of that bearishness. However, the central banks are the market, and the FOMC two-day policy meeting begins today with the rate decision, forecasts and the Chairman Powell news conference on tap tomorrow afternoon (Wednesday, 9/26/18). The stock market is typically bullish heading into and during the Fed meetings 80% of the time. The full moon peaked last night leading to buoyancy in the futures this morning.

The SPX has overbot stochastics and a rising wedge pattern agreeable to a pullback. The red lines show universal negative divergence which wants lower prices. The S&P 500 tagged the upper standard deviation band so the middle band at 2899 and rising is on the table. Price is overextended above the moving averages requiring a mean reversion. All these factors are bearish.

The ADX line is down to 11 so despite new record highs in the mighty S&P 500, the upward trend is NOT a strong trend; it is weak and getting weaker the last few months.

However, the central bankers are powerful. After all, they have succeeded in pumping every asset class on earth to record highs over the last decade with their ongoing Keynesian money printing around the world. The planet is awash in liquidity and all that money has to go somewhere so it continually sends prices higher. Window dressing for end of Q3 may also create lift in stocks.

The Fed is expected to hike by 25 basis points tomorrow; it is a done deal. Traders will be more concerned about the potential hike for December and will parse every Powell word carefully for clues.

The SPX dropped to 2913 on Monday using the strong 2912 level as support (see the previous post showing SPX Support/Resistance levels). This 2912-2913 level now takes on added importance going forward.

The banks have been happy with the yield curve steepening slightly but a hike in rates will likely push the short end yields up a little more flattening the yield curve perhaps creating sad banks. The market reaction after a Fed decision is always a mystery. The chart says down but dovish central banker talk can quickly turn frowns into smiles for the privileged class. 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.