SPX S&P 500 Daily Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation

The SPX continues eking out upside gains fueled by US-China trade negotiations happy talk and central banker dovishness. Each daily candlestick low can be assigned to a news bite that says the US-China trade negotiations are going well. The latest is that President Trump plans to extend the deadline for more tariffs from March 1 to May 1 an additional 60 days. Thus, stocks pop again.

Today, Wednesday, the FOMC Minutes are on tap at 2 PM EST and if the recorded words are dovish phrases of joy, the stock market will float higher again. Price has retraced 100% of the move down in December a textbook 'V' bottom. The ADX shows that the collapse in stocks in Q4 was a strong trend lower (purple box) but interestingly, this big near 2-month rally is not a strong trend higher.

The overbot RSI and stochastics, and money flow, are agreeable to a pullback in price. The stochastics, money flow and historgram are neggie d wanting to see price sent lower. The RSI and MACD line, however, remain long and strong due to the never ending happy talk from President Trump concerning the US-China trade deal.

All that happy talk on trade has boosted price over the last month or so. Granted, the Fed and other central banks have performed much of the heavy-lifting off the early January bottom. The US-China happy talk on trade likely leads to an outcome of 'sell the news' or at least makes this outcome more likely.

The upper band was violated so the middle band at 2704 is in play as well as the lower band at 2617. The SPX has shot higher like a rocket look at how price has not back kissed the 20-day MA now at 2704 (it is the same as the middle standard deviation band) since the start of the year; that is a long time so price needs to come back to show respect to the 20.

Considering all the above mumbo-jumbo, the SPX either tops right now in this daily time frame and collapses under its own weight, or, price drops today and then recovers tomorrow (Thursday) and that is the top. At that time you should see the RSI and MACD line display neggie d and with all indicators negatively diverged the top will be in for the daily time frame.

Remember, the low CPC and CPCE put/call ratios have yet to be rectified, or the elevated NYMO, so it will be no surprise that 100 handles and more are shaved off the S&P 500. However, there are three factors at play; the daily happy talk on trade and central banker dovishness, the daily chart above, and the weekly chart.

The SPX weekly chart shows the moonshot rally this year and indicators are long and strong wanting to see higher highs on the weekly basis. Thus, although a top is now at hand on the daily chart the weekly chart still has upside juice. The move lower due to the daily chart above may only be down to the 2700-2750 level and this would take place over a few days time. Then the SPX should come back up again for another matching or higher high in price to satisfy the long and strong weekly chart.

It may take 2 to 4 weeks for the weekly chart to peak out with neggie d. So it is a question whether the low put/calls extract their vengeance in the very near term taking advantage of the weakness on the daily chart, or, if this malaise and sideways chop continues for the SPX for another couple-four weeks into March where the larger and more substantive drop will occur. Take the pain now or in March.

Mixing it all together, the SPX may jog lower today, then higher tomorrow for another matching price high at 2780-ish, then drop like a rock for a few days. This drop may begin this afternoon with the Fed Minutes or this news release may be what creates a jog move for the next couple days as the SPX daily chart tops out this week.

The SPX will come back up after a several-day drop, however, due to the long and strong indicators on the weekly chart. A more significant market top is likely to occur, say mid-March, and that will lead to several weeks of downside in the stock market. The beat goes on. 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.