SPX

SPX closed at 1298.20 rallied 100 points, 8.5%, since SPX 1200 reversal (#9701) on 7/15/08. It retraced about 50% near to LT resistance 1313 after the Fed meeting as noted on 9950. Intraday is overbought and is showing negative divergences. While weekly momentum is developing to upside, daily price actions are now overbought.

In one month, markets have rallied strong and now we have negative divergences with rising wedge formations on intra and daily price actions even though wkly shows up momentum, we have negative divergences on breadth charts as well. Unlike Aug 2004 when we had extreme negative market sentiment, markets are showing bullish sentiment suggesting that markets are conditioned to expect “Nov election rally” recalling the contrarian market action in Aug 2004 sentiment. SPX 1300-1325 is a strong resistance and am expecting a pull back.