SPX S&P 500 2-Hour Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation

The band plays on as the new week of trading is underway. The SPX 2-hour chart is cooked; stick a fork in it. As explained late last week, however, the bulls may try to jam stocks higher into the two-day FOMC meeting that begins tomorrow. Stocks are higher 80% of the time (4 out of every 5 times) into the FOMC meetings. The full moon peaks on Wednesday at 9:42 PM EST and stocks are typically bullish through the full moon each month. Spring begins for the northern hemisphere on Wednesday.

The ECB touts more dovishness to begin the new trading week around the world creating buoyancy in global markets. As always, the central bankers are the market.

So its a battle of the 2-hour chart, that wants to spank equities lower now, versus the expected FOMC meeting joy this week. Global investors expect Federal Reserve Chairman Powell to ride around in the sky tomorrow, sitting on a dove, dropping money to the minions below. The world is awash in liquidity and Powell is expected to cheer the Keynesian printing presses going forward.

Price comes up in the Monday session to 2835 a couple points higher than Friday's high and a new high for 2019 the loftiest price since last October. The television pundits proclaim that the stock market  has just broken out higher and cannot be stopped. The Fed wine is flowing like water. The CPC drops to 0.81 and CPCE to 0.52 teasing multi-month lows. The uber low put/call ratios want to see the stock market sell off. Traders are euphoric and complacent believing that stocks will rally joyously going forward. There is no fear in markets. The Fed, ECB, BOJ and PBOC easy-money liquor may have gone to their heads.

Actually, the overbot conditions and rising wedge continue to signal selling ahead. The red lines clearly show negative divergence across all indicators. There is no more gas in the tank to take price higher. The S&P 500 remains buoyant on the expectation of dovish Fed joy. The sideways MACD is negative divergence, the indicator is no longer moving higher with price. The upper band was already tagged so the middle band at 2814 is on the table and also the lower band at 2789.

There are gaps below that look like swiss cheese (orange circles and lines). These will need filled at some point forward. The chart is bearish across the board but central bank dovishness, like love, overcomes all, for now. The blue lines show how the gap-up move a month ago has placed the SPX on an island above 2722. The uber importance of this 2722 level is obvious. When price retreats and comes down to 2722, it may simply fill the gap at 2712-2722, or, price may print an island reversal pattern where the SPX comes down to 2722, then super fast flushes to 2712 gapping-down through the same gap that it made on the way up, and then of course moving and trending lower towards the 2600's.

So this is where we are at; a Mexican standoff. Powell will speak on Wednesday afternoon so the story will be told then. Does the neggie d in the chart above spank the S&P 500 lower over the coming hours and days, or, does the expected FOMC dovish joy override the chart and create a few more hours, or day or so, of upside? Keystone is a chart man so the obvious expectation is for stocks to sell off starting now. The S&P futures are up +9 about 3 hours before the opening bell for the Tuesday session. The bulls are singin' songs and carryin' on starting the Powell party early. Here comes Powell ready to begin the two-day Fed meeting; his necktie has a jelly stain on it from the free buffet. 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.