SPX S&P 500 Weekly Chart; Gap Fill; Rising Wedge; Overbot; Negative Divergence Developing

The SPX comes back up to fill that gap at 2885-ish (orange circle) with yesterday's HOD. It is interesting times. Remember last week the thinking was that stocks would pull back in the near-term, on the daily basis, for a few days, then come back up for more highs due to continued strength in the weekly chart. This occurs but the drop in stocks would have been expected to be far greater. Those low CPC and CPCE put/call ratios continue to verify rampant market complacency. Many Wall Street analysts are upping this year's forecasts above SPX 3000 and higher.

The low put/calls still have to extract their pound of bull flesh. A drop of 40 to 100 handles would be expected in the SPX and even more. This situation has been extending for a while because markets keep getting goosed by happy US-China trade talk hype and of course the central banker money-printing.

Last week, stocks were not permitted to retreat any significant amount and bounced off the news that the US and China are nearing a trade agreement. If so, it is shaping-up to likely be an epic sell-the-news event since there has already been about 15 news hype announcements on the trade deal this year each adding about a half-dozen spoo's. The SPX weekly chart remains bullish and still has upside juice available on the weekly basis.

The top call in the Fall was simple with the overbot conditions, rising wedge, universal negative divergence with the chart indicators and the upper band violation; all this is bearish calling a top, and it occurs. Price gaps lower and the SPX needed to come back up for another look at that 2885-ish level in the future and it did yesterday, and perhaps will again today. Mission accomplished.

The current price action is moving higher into the apex of that red rising wedge. Stochastics and money flow are overbot agreeable to the SPX pulling back going forward but the RSI is not yet overbot. The stochastics and histogram are negatively diverged, wanting a pullback now, but the RSI, MACD line and money flow would like price to come back up again after the pull back, on this weekly basis. So there may be a couple jogs required, down, up, down, up, for price to peak on this weekly basis, say 2 to 5 weeks. The projection based on the weekly chart would be for a multi-week top to print for the stock market mid to late-April (it may be worthwhile to remain on guard here on out since the gains this year are all on central bank and trade-talk hype).

At this elevated price level, there may be some sideways chop in markets for the next couple weeks. The upper band must be respected at 2933. The 2900 level may come after a selloff occurs in the near-term. The ADX shows that the long trend higher in 2017 and the first half of 2018 was very STRONG but this petered out last summer. Then the Q4 crash occurs and the downtrend in the stock market was very STRONG but the Fed, PBOC and other central bankers colluded and saved the day as usual. The strong downtrend ended as February began and the stock market never looked back all the way up to the present. Note that for this record-setting epic market run higher in Q1, the ADX clearly shows that the joyous rally is NOT a strong trend higher.

The low put/calls are a Sword of Damocles hanging over the stock market's head. One false move and the SPX's head will be lopped off with as much as 100 points or more of downside that comes fast and furious. Perhaps the Monthly Jobs Report tomorrow morning will be a catalyst for the bears? The other outcome is more short term few-day pull backs that do not really pull the market all that much lower. This will enable the SPX to come back up on the weekly chart with a jog or two and print neggie d this month which would usher in many weeks of downside. April looks like a month where the stock market is setting up for many weeks of downside ahead. The "Sell in May and Go Away" Wall Street adage may be in vogue this year. 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.