SPX S&P 500 Weekly Chart; Overbot; Rising Wedge; Negative Divergence; Excessive Bullish Euphoria

The SPX weekly chart is obviously cooked and topped-out but the US Monthly Jobs Report is on tap tomorrow morning that may temporarily save the day. Despite the daily media AI hype and higher and higher stock prices, the chart above is ugly.

The last candlestick is not finalized until 4 PM EST tomorrow then a new candle begins on Monday. The long tail shows that stocks were lower this week but have now broken out higher, at the highs for the week, as the Jobs Report looms in 28 hours. 

Since price makes a new high you can check for neggie d and the red lines clearly show all indicators negatively diverged calling the top for the SPX in the weekly time frame. The RSI, Stochastics and money flow are at or coming off overbot levels all agreeable to a pullback. The rising wedge pattern is bearish.

The ADX indicates that the downward trend in 2022 was a strong trend lower from May 2022 to October 2022 when that strong trend downward was broken. Price stabilized and based with the inverted H&S pattern, or W-pattern bottom, if you prefer, and it was off to the races. The upward trend in stocks is a strong trend starting in February of this year and remains in a strong trend higher (pink box). The ADX lags the price tops but always provides useful information. Note that for the new high in price, the strong trend in the ADX actually decreases (neggie d). It tells you that the long rally is fading and out of, or running out of gas, verifying the negatively diverging indicators.

The Aroon is fantastic. You rarely see this and it is testimony to the excessive euphoric bullishness in the stock market right now. The Uber driver and doorman told Keystone they are placing their entire paychecks into the stock market since it is a no-brainer way to become wealthy fast. The Aroon shows that everyone, every single trader on Wall Street, is bullish the stock market and there is not one single bear to be found. What do you think is going to happen (the Aroon is a contrarian indicator).

The blue circles show distribution taking place since last Fall (the smart money sluffing-off shares to the dumb money that serve as bagholders at stock market tops). Joe Sixpack, Jane Winedrinker and Carlos Bagholder are tripping over each other to buy stocks with reckless abandon. The investment houses are telling them to go for it (pump and dump) and they just so happen to have some shares they can provide. Every stock market top needs the bagholdin' sucka's.

The chart is negative as discussed above and wants to top out on the weekly basis now and begin a multi-week slide lower, but, as often happens, a key data release is occurring as the top is being placed; the Jobs Report. If you listen closely, you can hear the jobs circus calliope coming down the street. If the chart continues higher after the data release, it will only temporarily delay the top for a week or two. The chart will tell you what is happening.

Once through the jobs report tomorrow morning, the daily and 2-hour charts can be referenced to find out when the exact top will occur. Keystone is bringing on index shorts but you have to be vigilant through the jobs report; the short positions may have to be ditched if a further euphoria begins. Otherwise, the jobs report can kick in the downside in a serious way so it would be prudent to hold a few short positions. If the jobs report creates a stock market rally, it will only delay the chart for a short time, say a couple weeks, until it sets up again for the top, so the determination would have to be made if you want to hold/add to the shorts as the chart resets. 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 Thursday Evening, 6/6/20, at 6:20 PM EST: The SPX 2-hour chart is in negative divergence across all chart indicators. She is cooked. The SPX daily chart is topped-out with neggie d across all indicators. The SPX weekly chart is topped-out with neggie d across all indicators. It's over, folks. Stick a fork in it. The US stock market is ready to receive its neggie d spankdown and begin a multi-week move lower. Did you put on shorts today? Did you pull the trigger? AC/DC will tell you to Shoot to Thrill and play to kill. The only thing that can save the stock market now is the US Monthly Jobs Report at 8:30 AM EST tomorrow morning only about 14 hours away. If the jobs report was not on tap, the stock market would begin its multi-week descent. If stocks rally on happy jobs talk tomorrow, the charts will set up negatively again in a few days or week or two. Are you ready for some fun?

Note Added Sunday, 6/9/24: The big Jobs Report hits the tape on Friday morning. It was supposed to settle the bull-bear debate and provide clarity going forward. It did neither. The US created nearly 300K jobs and the unemployment rate moves above 4%. Whazzat? Huh? The unemployment rate continues higher and the labor recession remains in place since September. The jobs are more of the same; migrant jobs, lots of part-time jobs, jobs in the government bureaucracy, leisure and hospitality. The have's, that took all the money in America's crony capitalism system, need the have not's to carry their bags, wash their clothes, cook their meals, clean their toilets, turn their sheets and even entertain them like the court jesters of yesteryear. The SPX monthly, weekly and daily charts remain in universal negative divergence across all indicators. That does not paint a rosy picture for the weeks, months and couple years forward. How's the SPX 2-hour chart doing? Cool. Price starts to receive the neggie d spankdown in the 2-hour frame which would be expected to ripple through to the daily, weekly and even monthly time frames. The US stock market is ready to receive a solid spankdown and begin a multi-week move lower. The only thing that can save it is happy talk from the Fed or AI cheerleaders but even that would only extend the top for a short time. Did you place some index shorts before the closing bell on Friday because you saw the 2-hour chart go fully neggie d? No guts, no glory.