SPX S&P 500 Daily and 2-Hour Charts; Assessing Short-Term Top Likely At Hand

It has been interesting following the SPX looking for the top since the put/call ratios and other metrics indicate ongoing complacency. Utilities dip back into failure mode placing a significant pullback (crash) on the table going forward. The stock market stumbles sideways like a drunk in Times Square last evening with the 2-hour and daily charts setting up with negative divergence. The top is not in until you see the neggie d.

On the 2-hour, you see the rising wedge pattern (bearish), overbot stochastics and universal neggie d across all indicators (red lines). Therefore, price needs spanked-down, and sogginess enters stocks on Friday. Late day, the last candlestick shows price coming back up to back kiss the lower trend line so a bounce or die decision is being made.

The SPX may want to bounce and return inside the wedge but that will likely only lead to another top in the hours or day or so ahead. Note the 4 tests of the RSI on the 2-hour chart. It will be a big deal if the RSI slips into bear territory below 50% (you will know that the rout is on). Ditto with the stoch's. The 2-hour chart is content with topping-out now or any day forward.

On the daily chart, the two thick purple lines show the ongoing multi-month sideways channel at 3800-4150 chewing up bulls and bears alike. Keystone likes purple crayons because they taste the best. Obviously, it is a big deal if price broke out above 4150 (bulls would cheer), or conversely, if price collapses from 3800 (bears would cheer). The bell will toll some day forward, will it toll for thee?

The red rising wedge is bearish. Price is teasing the multi-month sideways channel top trend line at 4150 deciding to bounce, or die. The February high was 4175-ish and price came all the way up from the bottom of the channel at 3800 so you would think price would at least knock on the 4175 door to say hello (thin red line). Negative divergence cannot be assessed until price makes a higher high. Thus, even though the MACD line is below where it was at in February, it is not neggie d over that 2-month time period. However, should price tag 4175-ish, the MACD line would be immediately negatively diverged across the last couple months creating moire negativity going forward.

Over the last few days on the daily chart, price rallies and the red lines clearly show neggie d for the RSI, histogram and stochastics. It is weak that the RSI could not at least get into overbot territory. If there is good news from the Fed or elsewhere, since the markets are news-driven and emotional these days, the RSI may seek the overbot territory but right now, the RSI is weak considering the rally.

The MACD and money flow remain long and strong wanting to see another high in price (perhaps 4175-ish). So a jog move may be needed such as up on Monday, down Tuesday, up Wednesday for the top. It is OpEx week so stocks would be expected to rally from a Tuesday low into a Wednesday high. That may be the last hurrah when all the indicators on the daily chart go neggie d, and you will know the top is in on the daily basis.

Price has violated the upper band (yellow) so the middle band at 4044 and lower band at 3894 are on the table. Note how the moving averages are lining out sideways on the daily chart reflecting the sideways price action the last few months. Chop suey. The slope of the 150-day MA indicates if stocks are in a cyclical bear or bull but has been oscillating in each camp since January. By definition, price will need to go sub 3925 to guarantee that the 150-day MA rolls over lower to continue the over one-year bear market. Other metrics, such as the SPX 12-month MA cross and NYA 40-week MA cross are indicating a cyclical bull market currently but we are in a transition period where the jury remains out.

The Aroon and CPC and CPCE put/call ratios are simpatico. The green bullish line is 100% at maximum euphoria with bulls believing higher prices and a big rally is ahead. Ditto the bears. The red bearish line is down near zero so all the bears have left town and agree that the bulls are right and stocks have nowhere to go but higher. These are contrarian indicators. The Aroon and put/calls indicate complacency and fearlessness with buying stocks despite all the waxing of worry and fear you hear on television and the internet. Traders and analysts are talking fear and then 10 minutes later buying 5 blocks of Apple.

The blue fractal may repeat for the Aroon; she may be topping-out just like the February top. The ADX indicates that despite this huge upside rally, it is NOT a strong trend higher. The ADX treats the recent rally as more of the same with price likely rolling over again going forward. If the rally had lots of legs, the ADX would be over 20, maybe over 25, on its way to 30. It has barely mustered enough strength to pull itself back up to the high in March at 16. Short-covering has fueled much of the upside rally.

The CPC and CPCE put/calls say a stock market top is at hand any day forward. The utilities broke down again on Friday placing the stock market into a crash profile again. The SPX daily chart is topped-out now, or will likely top-out early to mid-week, of course depending on any news from the Fed that controls the stock market in the crony capitalism system.

There is lots of excitement coming. The politicians will begin playing more games with the debt ceiling drama going forward creating market angst. For the last few days, the bump higher in prices was met with shorts panicking and covering adding more bull fuel. Most of the weak shorts are likely gone as the Aroon suggests so now we see who has the conviction to buy the bloated turd.

You can feel it in the air. Exciting times are ahead. The universal neggie d on the daily chart will begin the downside party. You have to wait until you see the whites of their eyes. 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 Wednesday Morning, 4/19/23, at 8:30 AM EST: The SPX 2-hour chart is topped-out with negative divergence. This weakness in the hourly time frame is reflected by the soft S&P futures. Utilities remain in failure mode with chips and copper weakening. The SPX daily chart printed a HOD at 4169 yesterday near the prior highs at the 4175-ish area. The daily chart indicators are neggie d except for the MACD line over the last few days that remains long and strong. Ditto money flow. The MACD is negatively diverged over the last couple months (if you consider the 4169 high to be a matching high compared to the 4175-ish on the last peak). S&P futures are down -25 points with the opening bell an hour away but another jog move may be needed to top-out in the daily time frame. Usually, stocks rally from a Tuesday low to a Wednesday high during OpEx but today is also the new moon peaking for the month when stocks are typically soggy so the two create the jumpy choppy slop. You will have to look at the MACD and money flow after the day gets rolling and a new daily candlestick begins on the daily chart. She's close to topping but you may have to be skeptical for another day or two and see if 4175-ish is in the cards. Keybot the Quant is long but hinting that a flip short may occur today. If so, the negativity in the robot would add a lot of street cred to the move lower and likely seal the fate for the start of the move lower for the stock market.

Note Added 4/26/23: SPX LOD 4049.