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

The SPX daily chart is set up with negative divergence across all the indicators as price makes the new highs. The expected stock market bullish joy in front of and leading into the FOMC decision and press conference on Wednesday maintains the buoyancy in equities. The SPX 2-hour chart is negatively diverged across all indicators and wants to see a selloff begin now. The daily chart above is in the same negative boat although the tiny green lines show the bulls trying to create near-term momentum with the Fed meeting.

The maroon lines show the overbot conditions, rising wedge and negative divergence that spanked price lower, but alas, President Trump touted happy trade talk and the central banks keep printing money, so price rallies to a new high for this year at SPX 2835.41, a high not seen since October (brown line and circle).

The purple box for the ADX shows how the move lower in Q4 was a very strong trend lower, however, this 3-month rally in the stock market is NOT a strong trend higher. The green line for the Aroon can only stay stuck to the ceiling for so long just as the red line for the Aroon can only stay in the basement for so long.

So both the SPX 2-hour and daily charts say down, however, there are counter forces in real-time that are impacting the stock market zeitgeist. Obviously, the Fed. Traders may want to stay in a holding pattern until Chairman Powell brings the tablets down from on high tomorrow and tells global traders how to trade. Second, is the tight standard deviation bands above.

The pink arrows show tight bands that squeeze out huge moves. The October tight bands squeezed out destruction for the US stock market. What will happen this time? Tight bands only tell you that a huge move is coming; they do not tell you what direction. The last three candlesticks are hugging the upper band. This tells you that the middle band at 2790 (which is also the 20-day MA), and lower band at 2754 are in play. However, the price behavior hints that an upside explosion higher may potentially occur for price due to the tight bands (price may already be breaking-out higher).

The tight bands can fake you out but within three days, you will know the direction forward. Price was hugging the upper band in late September and October and instead of rocketing higher, it collapsed like a sack of potatoes. This week is epic high drama for the stock market. History is being written everyday.

If Powell flaps his dovish wings and says rate hikes will not occur until 2020, the stock market will rocket launch higher, taking advantage of the tight bands. If it is a mediocre uninspiring, with nothing much new to say, more of the same from the Fed, the hourly and daily charts should finally exert their influence and send the stock market lower potentially strongly lower. The uber low CPC and CPCE put/call ratios still want their pound of bull flesh.

The S&P futures are up +11 about an hour before trading begins in the regular Tuesday session. VIX 12.53. The 2-day FOMC meeting begins today and ends tomorrow with the rate decision and dot plots released at 2 PM EST and Chairman Powell's presser beginning at 2:30 PM EST. Tomorrow afternoon may be a wild stock market ride. 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.