SPX S&P 500 2-Hour Chart

Keystone described the negative divergence forming on the 2-hour chart a few days ago. You see the price topping out with all indicators negatively sloping (red lines). The RSI, stochastics and money flow were overbot. The rising wedge pattern is bearish. All three parameters conspire to smack price lower, which occurs. Alas, the bears do not make much headway lower since the happy talk about US-China trade negotiations continues. Price is stumbling sideways and S&P futures are up +15 six hours before Friday morning's opening bell for the regular session. That pop, if it holds up, would send the SPX to 2657 after the opening bell.

The pullback off the top is about 60 handles and about half of that already recovered. The bears did not have oomph. This is partially due to the daily chart that still has upside juice available with the long and strong MACD line. The daily chart should top out in a day or few. The low CPC and CPCE put/call ratios and record highs in the NYMO hinted that a pullback in the stock market was needed in the near-term, and it occurs, but it is a pittance of what would be expected. The put/calls have plenty of room to move higher before signaling a tradeable bottom in stocks. The NYMO has a long way to move lower which will correspond with lower stocks.

After tagging the upper standard deviation band, the bears pull back to the middle band at 2640 but then could not take price to the lower band at 2608. Note that the lower band has not been touched for a month. This 2608 is a firm lower target for the days ahead.

The blue circle shows where the central banks intervened to save the day as usual. The global central bankers were likely concerned about the roll over and knew price wanted to go down to retest 2350. They did not want to let that happen because if 2350 fails, the door is going to open to an eventual print of a 1-handle (sub 2000) for the S&P 500 in the months ahead. Thus, central bankers start speaking dovishly and begin printing money like madmen to save the day. The Fed, ECB, BOJ and PBOC flap dovish wings in a coordinated fashion to begin 2019 reassuring markets that they will always save the day forever. The central bankers are the market. Look at the powerful rally on the central banker dovishness.

The 2-hour chart is stumbling sideways likely hesitating at further downside since the daily chart still wants another high before topping out, in that daily time frame. Despite the positive futures and perhaps happy ending to the week, the SPX will likely seek another near-term top over the next day or three and then roll over lower in the daily time frame. 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.