The week plays out as would be expected. The neggie d spankdown occurs on the 2-hour chart but then the bulls show-up at the tail-end of the holiday-shortened trading week. Stocks float higher to end the week with the new Q2 money at their back as well as the full moon buoyancy and the expected pre holiday weekend joy. Markets will begin showing their hand next week as traders and investors return from the Easter/Passover holiday.
The utilities stage a huge rally over the last two weeks bringing UTIL back above its 50-day MA a major development. This nullifies the Armageddon scenario ahead for stocks. However, the CPC and CPCE put/calls remain subdued indicating complacency and a stock market top at hand which should begin in the coming days. The utility failure over the last few weeks pointed to a terrible scenario ahead for stocks but the recovery in utes indicates that the coming pull back will likely be more of a garden variety pullback of 200 to 400 SPX points from wherever it tops out at.
The major collapse and crash in US stocks may have to wait for a few more weeks or months. Watch UTIL closely because if its good fortune quickly deteriorates next week and the week after, and price loses the 963 level, then the Armageddon scenario for the US stock market will be right back on the table.
The SPX 2-hour chart shows the top occurring and price receiving the negative divergence smackdown (red lines). Price tagged the upper standard deviation band so the middle band at 4098 was on tap and occurs. The SPX hugs the middle band which is also the 20 MA. Note those bands squeezing in tight (gold arrows). A huge move is coming in the 2-hour time frame but the tight bands do not tell you direction.
The 2-hour chart bottoms on Friday but note that the pop is due to only partial positive divergence (green lines). The MACD and money flow remain weak and bleak wanting to see another lower low in price (below 4075). You will have to wait for the 2-hour chart to set up with possie or neggie d again to determine the direction forward in the hourly timeframe.
On the SPX daily chart, price violates the upper standard deviation band so the middle band at 3989 is on the table as well as the lower band at 3824. As price printed the higher high, the RSI, histogram, stochastics and money flow are neggie d conspiring with the universal negative divergence on the 2-hour chart to create the weakness in stocks last week. Note, however, the MACD line remained long and strong so the pullback would be expected to be shallow followed by another matching or higher price high for the SPX since the MACD still has fuel in the tank in the daily time frame.
As traders joyously bot stocks into the holiday weekend, the money flow pops higher for a higher high creating additional bull fuel for price over the next couple-few days. All the chart indicators must be negatively diverged to call a top in a time frame. A textbook example above is the 2-hour chart with its neggie d so you knew a quickie short trade would work in this time frame if you are a day trader. The daily chart is not yet topped-out.
The SPX likely needs to come up to 4125-ish for another matching price high, even if it is only an intraday print, and at that time you can assess the chart indicators to see if all are neggie d including money flow and the MACD. If so, you can call the top in the daily time frame.
The tight bands on the 2-hour chart, that warn of a big price move coming in the hourly time frame, may shoot price up to 4175-ish to match the prior February highs, or, crush price, and begin the downside targeting 3989.
The slope of the 150-day MA is a cyclical stock market indicator. The 150-day MA is starting to curl higher indicating a cyclical bull market ahead. Price is above the 150 for the last 13 days pulling the critical moving average higher. The SPX 12-mth MA cross and NYA 40-wk MA cross are both bullish now indicating a cyclical bull market and the 150-day MA is finally starting to join the bull party drifting higher. The jury remains out for the ongoing 1-year cyclical bear market. April will tell the story and the bulls are gaining ground.
If the 150 continues sloping higher for the next couple weeks, the call will have to be made that the stock market is moving into a new cyclical bull market pattern (weeks and months ahead). If however, the negativity kicks-in, especially due to the ongoing trader complacency, the three metrics can easily roll over and continue verifying the cyclical bear. The next 2 weeks of trading are critically important and will likely tell you the cyclical story ahead for the US stock market.
So what does all this mumbo-jumbo mean? The utes recovering the 50-wk MA (trap-door) is bigtime for the bulls. It takes the major crash scenario off the table, for now. The low put/calls, however, continue hinting at a top to occur any day ahead and a likely 200 to 400 point drop in the SPX on tap. Talking heads may be speaking worry and fear but 10 minutes later they are buying stocks. Watch what people do not what they say; typically the greedy humans will lie.
The US stock market may top-out any day forward due to ongoing complacency and experience a 200 to 400-point retreat in the S&P 500. The daily chart says price needs another 2 or 3 days to come back up for a matching price high and for the MACD and money flow to go neggie d so the top can be called in the daily time frame.
The bulls can create several more days of upside if they can boost the RSI to a new high as price comes back up. The RSI is not overbot on the daily chart as yet so that is something that still may occur. If the bulls are joyous after the holiday, it should only be a few-day event that will further set-up a top due to complacency. The put/calls have been languishing lower so the stock market top is likely close at hand maybe on tap for Wednesday or Thursday. Simply watch the charts as described and you will be able to call the top yourself. 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 Friday Morning, 4/14/23, at 6:09 AM EST: Softness occurs but the bulls stage a big rally yesterday bringing price ever higher. You have to wait for the neggie d to know the top is in. If you bring up the 2-hour chart, you see the negative divergence so that is a top in the hourly time frame and S&P futures are lower this morning. Bank earnings are on tap that may create drama. If you bring up the SPX daily chart, the RSI is flat but does hint at momentum higher. The MACD and money flow remain long and strong. The histogram and stochastics are neggie d. Thus, a couple jog moves will top price out on the daily chart that likely wants to see that matching high at 4175-ish. Down, up, down, up would set the top in the daily time frame with universal neggie d so the top for the stock market in the daily time frame is next week. CPC and CPCE put/calls drop further verifying the ongoing complacency. Once the SPX starts dropping, there is likely 200 to 400 points of downside ahead if not more perhaps testing and even falling through 3800 which is the lower trend line of the multi-month sideways channel at 3800-4200.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.