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

The low CPC and CPCE put/call ratios signal rampant complacency and lack of fear in markets. Thus, a near-term stock market top is expected at any time, any day ahead. The only thing that can delay the top is happy news such as more central banker money printing, fiscal stimulus or vaccine hype. Today it is the latter, with another pharma company touting success with a vaccine for coronavirus (COVID-19). Also, US citizens were out and about during the holiday weekend creating a positive vibe, many thumbing their nose at the mask rules. President Trump refuses to wear a mouth diaper so many people are following his lead. Most of all, the central banker largess is what keeps those traders and investors buying stocks. Easy money, baby, it makes the world go 'round.  S&P futures are up +54 points reminiscent of the pop last Monday after that vaccine hype.

Since complacency is rampant, and a top is at hand any time forward, any hour or any day ahead, the SPX 2-hour chart is helpful in identifying the top. The chart went into negative divergence but note the sliver of strength remaining in the MACD line. The MACD line is negatively diverged over the few-week period but for the last couple days (few hours of trading), it has that tiny bit of fumes left in the gas tank to create that late Friday buoyancy.

If the vaccine news did not hit, the chart was pretty much cooked and the top would have occurred today. Since the S&P 500 is on tap to pop about 50 points when it opens for trading in five hours, that will put price over 3K (green dot).

SPX 2989 is an extremely important number for all the marbles. Bulls will win going forward if the SPX moves above and remains above 2989. Bears will dominate the stock market for the rest of the year as long as the S&P 500 remains below 2989.

On the pop this Tuesday morning, the chart above will of course print a higher high so you will begin looking for universal neggie d so you know when the top is in. Today can be a pop and drop, or a gap and crap if you will, or it may take a few hours or day or two to reset the top. When price prints the higher high simply watch the RSI, MACD, histogram and money flow to negatively diverge and that is the top. A good strategy going forward, considering the complacency and lack of fear in markets, is to short the rallies. Take advantage of this mornings pop and if you wanted to sell some stocks do not hesitate; ditch the longs today and bring on shorts.

The ADX shows the trendless market unable to move above the high 20's or 30 level so there is not a strong directional trend in equities currently. 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.