The hourly chart of the S&P-500 moved to a slightly higher high yesterday but, as you'll see in the weekly chart (second chart below), it hit a significant level of potential resistance at the close yesterday.
The index has lost ground so far today and the hourly charts are now showing more pressing negative divergences than they were earlier in the week...
S&P-500 hourly chart, showing negative divergence on MACD
As the chart shows, the negative divergence on RSI, earlier this week, lead to a quick 30-pt drop on the index. The lower band on the hourly chart quickly came to the rescue, however, and prices rallied back towards the earlier highs.
Those highs were surpassed yesterday. The new highs on the index were not, however, accompanied by new highs on hourly MACD and, as such, we now have a glaring negative divergence on MACD; infact, if you look closely, you'll see that there are two negative divergences on MACD; the most recent one resides within a larger one.
If the potential sell signal confirms itself, we'll be looking for a move to the minor support area at 752-767, at the very least.
While the negative divergences on the hourly chart are short-term sell signals, at best, the reaction to the 20-week moving average, as seen on the weekly chart (below), is the big "Kahuna", as it were...
S&P-500 Weekly chart, showing potential resistance from 20-week Moving Average
Notice that yesterday's highs (832) coincide with the 20-week Moving Average. The index was not been able to move above its 20wMA since June of last year. If/when that level is broken (and stayed above), an intermediate/major buy confirmation signal will have been generated.
Until/unless that happens, traders will want to be on high-alert to the possibility of an abrupt bearish reversal.
« More Negative Divergences on Hourly Charts »
The hourly chart of the S&P-500 moved to a slightly higher high yesterday but, as you'll see in the weekly chart (second chart below), it hit a significant level of potential resistance at the close yesterday.
The index has lost ground so far today and the hourly charts are now showing more pressing negative divergences than they were earlier in the week...
As the chart shows, the negative divergence on RSI, earlier this week, lead to a quick 30-pt drop on the index. The lower band on the hourly chart quickly came to the rescue, however, and prices rallied back towards the earlier highs.
Those highs were surpassed yesterday. The new highs on the index were not, however, accompanied by new highs on hourly MACD and, as such, we now have a glaring negative divergence on MACD; infact, if you look closely, you'll see that there are two negative divergences on MACD; the most recent one resides within a larger one.
If the potential sell signal confirms itself, we'll be looking for a move to the minor support area at 752-767, at the very least.
While the negative divergences on the hourly chart are short-term sell signals, at best, the reaction to the 20-week moving average, as seen on the weekly chart (below), is the big "Kahuna", as it were...
Notice that yesterday's highs (832) coincide with the 20-week Moving Average. The index was not been able to move above its 20wMA since June of last year. If/when that level is broken (and stayed above), an intermediate/major buy confirmation signal will have been generated.
Until/unless that happens, traders will want to be on high-alert to the possibility of an abrupt bearish reversal.