The topping process in the daily time frame continues. It's like waiting for Godot. The S&P 500 bumps along sideways through 2780-2817 for the last six days. The technicals have wanted to take the SPX lower for the last week or so but the happy trade talk and central banker dovishness creates euphoric upside joy to begin the year. The central bankers are the market.
S&P futures are down -6 about an hour or so before the opening bell for the regular Thursday trading session. President Trump did not reach a deal with the tin-pot communist dictator Kim Jung-un but markets do not seem to care. The US-China trade talks and Federal Reserve and other central banker money-printing is far more important to markets.
Price retreats for a couple days due to the neggie d with the RSI, histogram, stochastics and money flow. The overbot RSI and stoch's are agreeable to a pullback. Ditto the rising red wedge pattern. Ditto the upper band violation that has the door open to the middle band at 2747 and rising as well as the lower band at 2675 and rising. This is all bearish stuff.
The 20-day MA at 2747 (same as the middle standard deviation band) comes up to form a confluence with the 150-day MA at 2747 and 200-day MA at 2749. Price may want to seek this price level as a back test. The S&P 500 desperately needs to show respect to the 20-day.
The market bears must push the SPX below the 2747 level pronto to curl the 150-day MA lower, otherwise, the current cyclical bear market will develop into a cyclical bull market (the 150-day MA will slope higher).
The uber low CPC and CPCE put/call ratios and elevated NYMO continue to want to see the S&P 500 sell off. This broken record continues playing in the background.
It is an interesting top tick in price the other day. Note that it comes with negative divergence across the indicators (red lines) except, yes, the pesky MACD line. As price made the highest high, so did the MACD, it was not negatively diverging. Thus, the door has to remain open for another move up to 2800-2820 to make the matching high. At that time, should that occur, the MACD line should be neggie d and that will be the top (say today, or tomorrow, maybe even Monday). So the top is in now in the daily time frame or will be within a couple days.
The day after the top tick, price came up to about halfway of the top-tick candlestick so you could say it was generally a matching price high which would create neggie d for the MACD and say the top is in now. This is a cheesy top, however, hence we will know over next day or two if this is the top or if price needs to come up to 2800 again today or tomorrow to create the top (for negative divergence you typically want to see a solid price high as indicators solidly slope lower).
Keystone's 80/20 rule says 8's lead to 2's and 2's to 8's. Price closed above the 2780 level which opens the door to 2820. The SPX popped intraday up to 2817-ish at the high only 3 points away. If the SPX collapses from here, that was good enough for government work, otherwise, price may want to come up to kiss 2820. The upper standard deviation band is at 2819.
The beat goes on. The top is in for the daily time frame either right now or will be once price sneaks back up to the 2800+ level over next day or so. The only thing that can change the scenario is more happy trade talk, or central banker pumping, or other happy news. The 2747-2753 is an obvious downside target. The 2680-2720 price support area may serve as a landing zone; it jives with the 100-day MA at 2684 and the lower standard deviation band working higher. The 50-day MA at 2634 was never respected with a back kiss so that remains on the table.
The 10-month MA support is 2753. Think of this as a starting point for market trouble. Bulls will be okay if they keep price above 2753. Bears will begin growling strongly below 2753. The critical 12-month MA is at 2735 which is a key metric that says the stock market is in a cyclical bull market. You can watch the 150-day MA slope versus the 12-month MA cross to see if both confirm a cyclical bull, or, if conditions weaken, a cyclical bear market going forward. The 50-week MA support is at 2732. 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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