SPX Chart Shows Negative Divergence and Megaphone and H&S Patterns
The megaphone pattern remains in play and targets the SPX 1260 area. The upward channel is in place for the last month and received a spank down from the top rail. This is where the rising price was met with negative divergence and overbot conditions and received its expected smack down. The 8 MA is now under the 34 MA which is bearish. The RSI and stochastics are under the 50% levels, bearish, ROC is under the zero line, bearish. The neon green lines show the universal negative divergence that was in place to mark the top Tuesday morning.
The red lines show a weak and bleak profile that want to see another lower low. The pink lines show an H&S pattern now in play, so a lower low would test the neckline at 1355-ish. SPX 1354 is sturdy horizontal support from the last couple years, so if price ruptures the pink neck line at 1354-1356, the SPX will be in big trouble with a target at the horizontal support at 1340-1344. The bears are in perfect shape to push the indexes over the hill. Watch the indications mentioned to see if the market bulls are able to push back tomorrow.
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