SPX S&P 500 2-Hour Chart; Negative Divergence Developing; Tweezer Top; Potential Island Reversal

Here is an update of the 2-hour chart. Remember, on Friday, the falling green wedge, positive divergence green lines and oversold stoch's forecast a move higher which occurs. Price took off higher once the greedy humans were afraid they were missing the boat on the long side.

Look at that juicy gap down at 3980-4000; it's big enough to drive a truck through it. That gap will be revisited in the future. So price rallies today helped by the full moon peaking for the month but a Tweezer Top forms.

The two candlesticks topping at 4080 display a matching or higher price high so the indicators can be assessed to see if they are set up with neggie d to call a top. The red lines show that the RSI, stochastics, histogram and money flow are all negatively diverged wanting to see a spankdown in price and thwack, it occurs in the afternoon.

Note the sneaky MACD, however, that remains long and strong (sloping higher; green line). There is upside fuel remaining in the MACD tank that wants price to make one more high before it will join the rest of the indicators in neggie d and call the top in the 2-hour time frame. Sometimes it is like herding kittens when looking for the turns.

The long and strong posture with the MACD wants price to come back up to 4070-4080 again and at that time it will likely go neggie d joining the other indicators and that will be the VST top.

Today was noise because Pope Powell speaks this week on Capitol Hill both on Tuesday and hump day. Tomorrow matters and then Powell will regurgitate that speech and comments on Wednesday. Global traders, as always, are waiting for Pope Powell to bring the tablets down from On High tomorrow and tell everyone how to trade. It is a sick crony capitalism system in its last throes but it is what it is. Markets are idling until Powell waves his staph and directs traders on what to do tomorrow.

Thus, price will likely come back up since the topside is not quite done yet. It is interesting where the Tweezer Top stopped the rally; right at the 4080 resistance and gap about 2 weeks ago (blue lines). This set-up puts a potential island reversal pattern on the table. If the SPX rallies and comes back up to 4080, and then bingo, in a heartbeat, price leaps to 4090, gapping back up through the gap, and then continuing higher, that would be an island reversal. There is a palm tree on the island. The other outcome is price simply rallying up through 4070, 4080 and on to 4090 simply filling the gap without fanfare.

The RSI did not reach overbot territory which you would like to see to call the top. And the MACD needs to go neggie d as discussed above. When price comes up to 4080, you can assess the indicators again and see if all the neggie d holds, and if the MACD joins the party, if so, the top is in on the 2-hour basis.

Powell typically speaks in front of the Senate Banking Committee at 10 AM EST with questions following. Usually, the Fed will release Powell's comments at 8:30 AM or 9:00 AM before he sits down at 10 AM. Thus, markets may react to the release of comments and then, from 10 AM EST on, anything can happen. 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.

Note Added Tuesday Morning, 3/7/23, at 10:20 AM EST: Boom. Pope Powell lays an egg flapping hawkish wings expecting more rate hikes ahead. The 2-year leaps to 4.96% a year-to-date high. The 10-year yield is at 3.98% for a 2-10 spread dropping to -98 bips. Stocks tank and the SPX drops to 4013 right now testing the 200 EMA on the SPX 60-minute at 4024; failure. A short-term bear market is back but price will wrestle and decide to bounce or die from 4024. Right now, it is dying. Pope Powell is speaking. The 2-hour chart collapses as Powell lays an egg.

Note Added Tuesday Morning, 3/7/23, at 10:22 AM EST: SPX 4024. Bounce or die.

Note Added Tuesday Evening, 3/7/23, at 8:00 PM EST:  It died.

Note Added Friday Morning, 3/10/23, at 7:30 AM EST: The US stock market collapses. The SPX plummets -1.9% to 3918 losing the 12-mth MA at 3957-3960 and 10-mth MA at 3921. Back tests are likely needed going forward. More choppy slop is likely with the US Monthly Jobs Report dropping in an hour and inflation data next week. The 2-year yield received the negative divergence spankdown in quick order losing 20 bips in a flash an unbelievable move. The 2-year yield is at 4.82%. The 10-year is at 3.85%. The 2-10 spread is at -97 bips becoming less inverted after the -110 basis point drop. A new hook pattern forms and heads higher for the 2-10 spread ushering in the US recession going forward, unless the yield curve becomes more inverted and drops below -110 bips which is already rare multi-decade lows.