SPX S&P 500 Weekly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Price Extended

The SPX weekly chart is very important these days. The daily chart has wanted to roll over for a month and more but the central bankers prove too powerful so far. Any small pullback is bot by enthusiastic dip-buyers. The complacency and uber bullishness is verified by the low CPC and CPCE put/call ratios and the low VIX. Thus, the weekly chart may have to top out to kick the daily chart negativity into gear and take the whole shooting match lower.

The SPX prints the new all-time closing high this week at 2933.68 on 4/23/19 but the all-time record high at 2940.91 from 9/21/18 (7 months ago) remains in place. The SPX prints a high this week at 2937 which is 4 points shy of the record.

With the matching and higher price high as compared to last September, the chart indicators are in negative divergence (red lines) sans the MACD line. It is always the pesky one; the last one to show up at the party and last one to leave. The RSI is also trying to sneak out a higher high so watch that. To call the top on the weekly basis, the RSI and MACD line have to roll over with negative divergence as price prints a higher high; but there are interesting things occurring. These comments so far are in reference to the last few weeks.

If you look over the last 7 months, the chart indicators are in negative divergence for that time frame. This is important since the MACD line that wants another higher high on the weekly basis in this near-term, may be overruled by the broader longer term negative stance. In other words, price may simply start dropping anytime as the brown line in the margin suggests. Otherwise, the MACD line requires at least one jog move, down one week up the next, for the top to then form with the MACD going neggie d in this near-term; that will be the top, say, in a couple weeks as May begins or the first-half of May.

You can see the SPX overextended to the upside for the prior tops. Price is above the moving average ribbon (above the 20-day MA above the 50 MA above the 100 above the 150 above the 200). Price typically needs to mean revert under this scenario and the early 2018 top sent price to the 50-week where it bounced. This year, the bottom occurred when the central bankers intervened in early January at the 200-week MA support. The 20-day is not yet above the 50 but that should occur over the next couple days and price again needs to mean revert lower.

The ADX purple box shows the strong uptrend in 2017 and 2018 it was one for the record books. That strong upside trend petered out last summer. As stocks topped out in September/October, Keystone highlighted this back then as he called the top. The trend higher was no longer strong. The waterfall crash occurs in Q4 and this was developing into a strong trend lower, as the ADX shows. That is when the Fed, PBOC, ECB, BOJ, and the whole Hee-Haw gang panicked and stepped into markets in January to save the day, which they did. It is fascinating to see that despite this historic rally in Q1 this year into Q2, the ADX is down at 16 telling you that it is not a strong trend higher despite the new record closing high.

The Aroon readings are at peaks and valleys for the prior two tops. The green line is pegged at 100.0 and the red line at 0.0 but this time around the green line is at its euphoric maximum but not the red line. Considering that a new closing high was printed this week, the red lines should be at zero. As mentioned above, the expectation is for the SPX to print a multi-week top at anytime forward into early May. This should open the door to several weeks of weakness. The low put/calls have not taken their pound of bull flesh and the expectation would be that the chunk would be from 40 to 100 SPX handles or more. 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.