S&P, &SPY: Broadening Channel can become a Diamond Top

22 juil. 2019

I go over a lot, the Ichicouds, VPVR, OBV EMAs, in the main chart, and MACD, RSI, Stoch, Bollingerbands and Candle formations in other charts. We established a high in January 2016 and since then we have gone up… 5.3%. I am not impressed and I am certainly not bullish. The linked charts show what I have been looking at on the yearly timeframe, and an attempt to call the SPX top that preceded a 7% dip then a recovery above. There is "right, wrong, and early" and that call was probably about 3 months early.

The main chart shows the Double Ichicloud, with both crypto and normal equities settings because I find the chart compelling enough as when the normal cloud fails we see the higher settings on the crypto cloud are still acting as support. We only have the T-K for the crypto cloud because the chart can get too busy and generally higher settings predict bigger moves.

The resistances suggest a retrace is in the cards and the two points setting up the support suggest a third touch. A third touch anywhere would be deeply psychologically damaging to many bulls, and the implications on the economy are stark. Most likely the third touch would show some consolidation at half mast, roughly were both the clouds have a divot and we see the kijun moving along. Most likely place for this move to conclude at VPVR high volume node.

Part of my nascent Cloud-Volume profile trading system that when the upper volume area is above or in the cloud then there is volume behind the uptrend to support continued upward momentum when the cloud is tested as support. Once the Volume upper value area falls under the cloud then volume is dropping off. We see that the volume for these visible range dropped off between 2016 and 2017. Now the Upper Value Area is right at the bottom of the crypto cloud. With some foreboding I mention that the price action often goes “edge to edge” on the VPVR so we could expect a lower below the point of control to $180.

The OBV EMAs are a bit hard to see, but we just had a bearish cross of the 20 over the 10. Should the 10 finally cross below the 100 things will get grizzly. Should the 20 cross below the 100 it will be a lost decade at least.

Even the sensible bulls should see from the chart below that we are at the top of the weekly Bollinger bands with considerable bearish divergence against most common indicators. We also see with the RSI that the bulls cannot get us into over-bought conditions, which means strategic profit takers, and probably the fabled whales are stepping in on the weekly timeframe, selling into strength. A retrace to the bottom of the weelky Bollinger Bands puts us at around 9% retracement.

The monthly setup below shows an even more brutal set of circumstances. The RSI which was capped on the weekly is falling drastically on the monthly. The black arrow shows were 50 was defended strongly, and we only went to 49.75. The red arrow shows a decisive dip to 47 and the bearish divergence continues to build. The Stoch RSI has basically given up going above 50 and continues with its own bearish divergence. The only glimmer of hope on the month chart, indicator-wise is the MACD looks as if it could have another pump to the upside.

Any hope from the MACD can be disregarded, not only due to what the other indicators have told us, but because what the candles are telling us as we appear to have develop a evening star reversal candle. Once again, this is the monthly chart. The reversal candle on this timeframe preceded a 20% drop.