SPX S&P 500 Daily Chart; H&S; Rising Wedge

The S&P 500 is currently printing a textbook H&S (head and shoulders) pattern (red lines). The head is at 2950 and neckline at 2800 so that is a 150-handle difference, thus, price will likely drop to 2650 if the 2800 fails.

The ominous orange rising wedge is in play. The collapses from rising wedges can be quite dramatic and typically retrace the entire move which would eventually send the S&P 500 down to 2350-2450.

Keystone highlighted the universal negative divergence in the chart indicators in late April along with the rising wedge and overbot RSI, stochastics and money flow. A neggie d spankdown was on tap and occurs but the bears cannot receive any significant downside traction. The Federal Reserve and other central bankers are printing money like madmen to keep the global stock markets elevated and protect the privileged class that own huge stock portfolios.

The 20-week MA is 2803. The 10-month MA is 2789. The 100-day MA is at 2786. The 12-month MA is 2785. The 200-day MA is 2777. The 50-week MA is 2776. The 2800 H&S neckline support is obviously a critical support and psychological level. Price may want to come back down for another look. Since it is in the neighborhood, the major price test may occur at the 2785-2789 support gauntlet. The loss of the 2800 level would be important but the 2785-2789 level is for all the marbles. If it fails, the stock market will descend into a cyclical bear market pattern.

The negative or flat slope on the 150-day MA above continues signaling a cyclical bear market, however, price is above the 12-month MA at 2785 is signaling a cyclical bull market. Either the 150-day MA will begin sloping higher to agree with the 12-month and point to new record highs coming, or, the SPX will fail through 2785 verifying the cyclical bear ahead.

The ADX shows that the down move in Q4 was a very strong trend lower. The global central bankers colluded and stepped in to save the stock market in early January exactly like the Tweezer Bottom in early 2016. The Federal Reserve, PBOC (China's central bank), ECB and BOJ panicked on 1/3/19 (red candlestick) because the US stock market was in collapse. This year's central banker-induced rally finally attains strong trend status in April as shown by the ADX but it quickly rolls over again. The uptrend this year in equities is not a strong trend (it is another central banker pump and the one-decade long Keynesian money-printing financial engineering experiment continues).

The chart indicators are lining outs sideways as price tests the 2800-2820 level during the last couple weeks. The RSI, stoch's, histogram and money flow are positively diverged wanting a bounce in price. However, the MACD line is negatively sloped wanting to see another lower low in price or at least a test of 2800. The lower standard deviation band is violated so the middle band, the 20-day MA, at 2878, is in play. Price came up to touch the middle band but fell short of the goal. Price then rolls over and taps the lower band again. The signals are mixed and all over the map, hence, equities chop sideways.

President Trump's daily comments on the US-China trade war sends stocks to and fro. Many investors continue to believe a deal will occur after Xi and Trump meet at the G20 meeting in June. Traders also believe the Fed will continue supporting the stock market so the dips are met with buyers. Stocks may develop a buoyancy into the G20 as traders become optimistic about a deal, however, this positivity may be misplaced and the end of June and forward may begin a more difficult path for equities.

The sideways choppiness in the stock market chews up bulls and bears. It is best to avoid the 2x ETF's in this price action since those instruments will chew up capital. In general, trade less in choppy whipsaw markets to reduce losses. Watch the 2800 H&S neckline, also the 2785-2789 critical support level that dictates pain or joy for the intermediate term ahead, and also the 150-day MA support at 2745 which is the last chance corral. If the 2800 and 2785-2789 support levels fail, price will likely tumble through 2745 like it is not even there and the market carnage will become very ugly. Stock market bulls are fine as long as they do not let the critical 2785-2789 support level fail. 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