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

The SPX 2-hour was set up for a top but the sly bulls keep stretching out the event. The expectation was for a jog move to place the top, one candlestick down, another back up for a matching high, and that would be it with all the indicators in neggie d. But alas, you can see that for the high print in price, the MACD is still long and strong, thus, it still has some gasoline in the tank to bump price a smidgen higher again. S&P futures are up +7. Price may want to jump to the 2815-2822 range for a matching high and as long as the chart indicators all remain below the thin red lines in the right margin, negative divergence, the near-term top is in.

Each candlestick is 2-hours although there are shorter-term candlesticks due to the 6-1/2 hour trading day. The thin blue line shows the drop in stocks at Thursday's opening bell and then the market staggered sideways the remainder of the day. The bears needed price to come back up after the opening bell selloff and that would have placed the top, but instead, price muddled sideways in a sick stagnant malaise.

The pop in the futures, which may lead to a pop at the opening bell for the Friday regular trading session, may be a great opportunity to short into. The way the chart is set up, a pop and drop, or pop and flop, or gap and crap, all these things are the same, may be on tap this morning. Keystone will likely be entering short-term index shorts on the opening bell pop. It will be interesting if the bulls can peg the TICK machine up to the +900 to +1000 range or higher which will be a nice place to enter short.

The daily chart is in negative divergence so the drop in the stock market should have several days of legs. This is interesting since the Fed meetings are up about 80% of the time and this occurs on Tuesday and Wednesday. Remember, the low CPC and CPCE put/calls signal off-the-charts uber euphoric joy in markets, the complacency is excessive, so the bears plan on taking a chunk of bull flesh.

The SPX weekly chart is setting up negatively far faster than expected. Price reversed its losses last week printing a matching and higher high but all the indicators are in negative divergence except the MACD line (over the last three weeks). This means the multi-week top is coming a lot faster than thought a couple weeks ago. A jog move on the weekly basis, down one week, then back up the following week to a matching price high, would potentially place the top in the weekly basis. If the MACD goes neggie d on the weekly chart say a couple weeks or so out such as late this month or early April, stocks will be then set up for multiple weeks of downside ahead.

Mixing all this mumbo-jumbo into the gumbo, it serves up a tasty scenario for bulls and bears going forward. Stocks should top out after Friday morning's opening bell then fall apart all day long. This should continue into Monday, then the FOMC meeting buoyancy will provide a small relief rally Tuesday-Wednesday, then the down resumes into the end of the month. The SPX should retrace from 40 to 100 points maybe a lot more. At that low, perhaps a token trade deal is signed between the US and China at the end of the month which provides some short term joy. This jives with the weekly chart that will bring the S&P 500 back up again to the current highs for a top in early April. This will be a significant top in the stock market and lead into multiple weeks of downside. April and May may be ugly months for equities. 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 8:00 AM EST Friday Morning, 3/15/19: The S&P futures remain buoyant and happy up +13. The VIX drops to 13.07. Volatility drops and futures pop, however, you would already expect the VIX to be well down into the 12's. Today is Quadruple Witching so trading volume will be heavier at the opening and closing bells. A pop of 13 points in the cash index will place SPX at 2821-2822. Traders want to finish the week singing a happy upbeat song. Will they succeed or will they be hitting flat notes this afternoon? 

Note Added 8:37 AM EST: The SPX is +13 and the VIX slips to 12.97: a 12-handle! The bulls are dancing and singing, "Happy Days Are Here Again." Whoopsies, daisies. The VIX is back above 13 at 13.02.