Okay, so the positive divergence on MACD on the hourly chart of the S&P-500, which we'd highlighted earlier this week, has brought about a 66-pt (10%) rally in less than 3 days. That move may or may not be over; it's too early to say. However, there are a couple of potential short-term bearish signals on the hourly charts that traders will want to pay attention to.
Take a look at the chart below...
Hourly chart of S&P-500 Large Cap Index (SPX)
Firstly, note that a couple of gaps have been filled on the way up. The lower of them (Mar 5th gap) was filled during the big move higher on Tuesday. The second of them (Mar 2nd gap) was filled a few minutes ago. These developments, while not all-out sell signals, can actually be seen as a positive for the bears because now the index can resume its downward path without having the damocles sword of a couple of unfilled gaps hanging overhead.
That fact aside, a slightly more pressing matter is the potential negative divergence on hourly RSI. If that signal proves to be correct, we are likely going to see a quick move down to the hourly bollinger band (680, at present), if not to the lows near 666.
There is also another potential (but somewhat weaker) sell signal on MACD. If there the index loses ground for an hour or two, there will be a negative MA crossover on hourly MACD; that's a weak sell signal.
As far as the bulls are concerned, they're still in control at the moment - the rising upper bollinger band (~748) which is quite a distance above current price action and it will act as a magnet if the bears can't get their act together - but traders will want to keep an eye on the aforementioned potential sell signals.
« Hourly chart of S&P-500 »
Okay, so the positive divergence on MACD on the hourly chart of the S&P-500, which we'd highlighted earlier this week, has brought about a 66-pt (10%) rally in less than 3 days. That move may or may not be over; it's too early to say. However, there are a couple of potential short-term bearish signals on the hourly charts that traders will want to pay attention to.
Take a look at the chart below...
Firstly, note that a couple of gaps have been filled on the way up. The lower of them (Mar 5th gap) was filled during the big move higher on Tuesday. The second of them (Mar 2nd gap) was filled a few minutes ago. These developments, while not all-out sell signals, can actually be seen as a positive for the bears because now the index can resume its downward path without having the damocles sword of a couple of unfilled gaps hanging overhead.
That fact aside, a slightly more pressing matter is the potential negative divergence on hourly RSI. If that signal proves to be correct, we are likely going to see a quick move down to the hourly bollinger band (680, at present), if not to the lows near 666.
There is also another potential (but somewhat weaker) sell signal on MACD. If there the index loses ground for an hour or two, there will be a negative MA crossover on hourly MACD; that's a weak sell signal.
As far as the bulls are concerned, they're still in control at the moment - the rising upper bollinger band (~748) which is quite a distance above current price action and it will act as a magnet if the bears can't get their act together - but traders will want to keep an eye on the aforementioned potential sell signals.