SPX S&P 500 Monthly Chart

The bears are spanking the bulls hard since early October. The volume candle in October, on the sell side that month, is the largest over the last couple years. Price recovered, then moved lower again, however, the volume may not be quite as strong. This hints that a relief rally may occur.

Keystone explained the stock market topping process during the summer and early Fall, as it occurred in real-time, the only Wall Street analyst to do so. It is comical that investors are now seeking advice and forecasts from the same blind pundits, strategists and traders that failed to call the top in the stock market. This is the rhythm of Wall Street. Anyone following Keystone this year knew what was coming. 

It is not rocket science. Stocks receive the neggie d spankdown. As price printed all-time record highs in September, the indicators were all negatively diverged except for the MACD line. Remember, that was when Keystone was highlighting the purple circle for the MACD. Price needed to make another matching or higher high and the MACD line needed to go neggie d. This would identify the long-term stock market top. It occurs in early October. The candlestick prints another matching high but the MACD lost energy sloping lower. It was ovah, as they say in Brooklyn, and stocks collapse due to the negative divergence as expected.

Price loses the 10-month MA which is bad. The SPX then lost the 12-month MA which is the demarcation line between a cyclical (weeks and months ahead) bull market and a cyclical bear market. We are now in a cyclical bear market since October with the SPX below the 12-month MA at 2746. The 10-month MA at 2742 crosses below the 12-month MA a very negative signal for the stock market going forward. Note the weak and bleak chart indicators all sloping lower. That says lower lows are likely ahead for stocks on the monthly basis.

The lower standard deviation band at 2369 is in play. On the up side, price may want to back kiss the 20-month MA at 2657.

An easy gauge for the stock market ahead is to simply watch the RSI. If it moves sub 50 into bear territory, that is bad for stocks. If the RSI curls up and does not go sub 50, bulls will cheer and try to establish a relief rally. Any bounces in the stock market will likely lead to lower lows ahead on a monthly basis. Stocks may enjoy a Santa Claus rally this year into the new year, however, the Grinch is likely lurking in the 2019 bushes. Bulls have absolutely zero hope in the stock market unless the SPX climbs back above 2746. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.