S&P finally managed to move and closed above the August peak.
This is a weekly chart
We now have a higher high on the weekly chart. The week is not over and the situation may change, but so far, so good. Notice that RSI is making it into overbought territory for the first time since the April top. Moving averages have been improving. We have a MACD cross. So, the weekly technicals have improved a lot and there still is a lot of room to go. Any pullback should ideally be supported by the MAs.
This is a daily chart
We have a higher high on the daily frame. Index finally managed to hit the mid-line of the blue channel.
Index ‘s RSI is overbought and the mid-line is a logical place for some sort of top, or consolidation, or just a temporary pause. I am not predicting anything, just that we have a technical setup for a pause or more serious downside. On the other hand, a hard push above the mid-line is typically a sign of strength and will then set up the mid-line as a support.
If index is going to pullback, I would like the upper purple line to hold it. In fact, I would very much like the index to pull back to the upper purple line and spend enough time so that shorter moving averages can catch up.
On a separate note, index moved above the neckline of an Inv H&S that measures to 1220-1230 -- just though I'd mention it
Daily breadth was excellent. Daily volume shrank
Breadth has led every good rally including this one.
McClellan Oscillator came at a lower low. It might be putting in a negative divergence and we may be close to some sort of a peak or pause as I mentioned above with respect to the mid-line of the blue channel.
A few posts ago, I showed this chart and said that I would have liked the breadth measures to expand, and that seems to be what market has done
Hard to argue with breadth!
This is a 60-min chart
Just look at that RSI peak. I though all shorts and Hindenburg aficionados had already been creamed. Maybe some were still hanging on to losses praying the August peak would hold the index.
I had a question from a reader about negative divergences and their powers of seeing the future. I think only the crooks and the deluded can see the future. All indicators and stuff are tools to assist us in assessing probabilities. First off, the larger trend takes precedence. That is why I start with weekly and come down to intraday. Secondly, strong trends are less affected by oscillators than trading ranges. A divergence is a warning sign and that’s about it. Notice we have had negative divergences on RSI, but all sellers could do with it was meaningless lateral moves in terms of price, they could not even bring the RSI to oversold, a sign of strength that I pointed out a few posts ago.
Tomorrow’s the Fed matinee and it may get volatile.
I have my levels set at 1130, 1120, 1115, and 1110.
OEW pivot support is at 1136 and 1107. Pivot resistance at 1146 and 1168
Long term trend is up. Mid-term tend is up. Short term trend is up.
Have a Nice Evening!
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