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

The stock market resumes the upside the last couple days and in today's hump day action the SPX is up 17 points, +0.6%, to 2808. Traders are cheering the global central bankers that colluded this year to pump stock markets higher. On the 2-hour chart above, price is printing a triple top. That is interesting. Many technician say stocks never print triple-tops (the thinking is that price typically rallies on that third move and pumps up through the prior 2 highs never allowing a triple-top to form) but Keystone does not subscribe to this. It seems that half the time this can happen but the other half of the time, price does top out and roll over with a triple top.

The SPX did not yet violate the upper band at 2819, perhaps that will come, so this has to remain on the table. Price will eventually migrate lower to the middle band at 2769 and rising. The RSI and MACD line are long and strong wanting to see another higher high in price after a pull back in this 2-hour time frame. The histogram, stochastics and money flow are negatively diverged wanting price to pull back. Ditto the overbot stochastics. The RSI is not yet overbot so that is another potential thing to occur if price seeks the upper band.

The SPX should slip lower for a candlestick, then back up again for a matching or higher high, that action may roll the RSI over to the downside, and then price will jog again, down-up to another high, that should roll the MACD over into neggie d and place the top in this time frame. So, perhaps, 2 to 4 candlesticks, or 4 to 8 hours, for the top to print, so today or early tomorrow. The only thing that can change things is happy, or sad, news which will push price accordingly.

The 2-day FOMC meeting is next Tuesday and Wednesday, so Chairman Powell will speak on Wednesday afternoon. He has his topcoat and tophat at the cleaners and is busy polishing his cane and tap shoes. Powell plans to put on quite a show this time next week. He will likely flap dovish wings and the crowd will go wild with greedy adoration.

The full moon peaks next Wednesday as well so stocks are typically bullish through that period. Stocks are bullish 80% of the time into a Fed meeting so that would be say Monday afternoon into the Wednesday afternoon festivities. Thus, just painting a picture with these factors, the bears have a window of opportunity now to move stocks lower, say into Monday lunch time. The bulls will then have the wind at their backs especially Tuesday and Wednesday of next week. Traders may jump the gun expecting the Fed rally and begin pumping equities higher on Monday afternoon into the Fed decision. Thursday and Friday of next week, after the FOMC decision and Powell presser, are more of a toss-up but the bears could reexert influence at that time. So if the bears plan to flex their muscles, they better start now, the remaining time this week, since the window likely only remains open through Monday morning. Then late next week the bears may growl further.

All that mumbo-jumbo jives with the 2-hour chart topping out today or tomorrow and perhaps weakness on Thursday and Friday. On the chart above, watch for the RSI and MACD to go neggie d when price prints a new high and that will tell you when the top is in.  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.

Note Added 11:05 AM EST: The SPX pops above 2813 now only a whisker from that upper standard deviation band. 

Note Added 11:10 AM EST: The SPX pops above 2815.

Note Added 3:09 AM EST on Thursday Morning, 3/14/19: The SPX rallies up to 2821.24 yesterday tagging the upper standard deviation band, thus, the middle band (on the 2-hour) at 2773 is in play and also the lower band at 2715. The SPX closes at 2811 creating a triple-top pattern. Keystone's 80/20 rule says 8's lead to 2's so the breach of 2780, as mentioned in previous charts, hinted that 2820 was on tap, and it occurs. The 2818 leads to 2822 which price teased. The RSI now displays neggie d on the 2-hour chart as do the other indicators except for the MACD. The MACD line is always the prima donna of the indicators and the last one to show up fashionably-late to the party. The indicators want to spank price lower, and S&P futures are soggy down -4, due to the neggie d, however, price will want to come back up since the MACD still has fuel in the tank. When the SPX comes back up, in this 2-hour time frame, that should be the top as long as the MACD goes neggie d and the other indicators remain in negative divergence. So one candlestick down and one up is 2 to 4 hours of time so a guess would be for a stock market near-term top around lunchtime today or in the afternoon. The CPC and CPCE put/call ratios remain uber low signaling rampant market complacency and fearlessness, traders are buying at the ask while sipping Fed wine, so the SPX still needs to puke lower in the near-term. A tradeable bottom in stocks will not occur until the put/call ratios spike higher to indicate fear and panic. The question is whether the put/calls wreak their havoc now, over next couple-few days, with a big drop in the SPX, or, the pullback may be shallow like a week ago, and the recovery would resume next week as Powell flaps his dovish wings. The put/calls may delay their day of reckoning to the last week of March or early April, and that would jive with the SPX weekly chart perhaps rolling over with neggie d(this will set up multiple weeks of weakness ahead). For now, in this near-term, keep an eye out, because this 2-hour is topping, and the flush lower may be quick perhaps a bloody Friday and Monday and then the Fed joy kicks in for Tuesday-Wednesday.