SPX S&P 500 2-Hour Chart; Oversold; Positive Divergence Developing

The new week of trading is off and stumbling. Utilities are in failure a very ominous set-up for stocks going forward. Banks are buoyant which create this morning's positivity. Copper is weak.

The SPX 2-hour chart is setting-up for a recovery move due to the positive divergence (green lines). Keystone called the top that led to last week's move lower. The red rising wedge, overbot RSI and stochastics, and universal negative divergence (red lines) by ALL indicators as price makes the new matching or higher high, told the story. There was no guess work involved. So she, the naughty market, receives the neggie d spankdown.

Price gaps down (orange circle) on Friday morning 3 days ago. As price makes lower lows, you can see the possie d starting to form. Stochastics are oversold agreeable to a bounce higher. The week starts off on a positive note but take a look at the MACD line; it remains weak and bleak (sloping lower). The other indicators are possie d contributing to this morning's buoyancy in the stock market. However, the MACD says another lower low is on tap before it is willing to go possie d.

Thus, the expectation is for the SPX to roll over in this 2-hour time frame and come down for another matching or lower low today. This should occur over the next couple candlesticks (say from now through 2 PM EST) and then ALL the indicators should be set up with possie d. Price will then bottom and bounce today and rally higher probably targeting the orange circle to fill the gap. The rally will have to be assessed as it occurs to see if a gap fill up at 44 hundo is on tap, or not.

If you bring up the SPX daily chart, you see that the RSI is possie d over the last couple days helping the 2-hour chart create buoyancy in stocks today. However, the other chart indicators on the daily remain weak and bleak.

Remember, trading is playing 5-dimensional chess where you must balance the divergences on the minute, hourly, daily, weekly and monthly charts to project the path forward. The expectation is for the SPX to bottom today and begin a mini-rally for a day or three (in the 2-hour timeframe). At that time, when neggie d again forms on the 2-hour chart, the SPX should roll back over and resume its downward move on the daily basis going forward.

When the 2-hour bottoms today say around lunchtime or in the afternoon, watch the RSI and other indicators. You have to first make sure the MACD line is no longer sloping lower and in possie d to call the bottom; and make sure the other indicators remain possie d.

When price relaxes lower over the next minutes and say hour or three, the MACD line may remain weak and bleak and may also turn the RSI lower which would mean the weakness will remain for another day in the 2-hour timeframe. 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.

Note Added 10:42 AM EST: That was fast. The SPX drops like a rock and prints the lower low. The MACD is still weak and bleak so the sogginess persists in the 2-hour time frame. The 2-hour chart prints a new candlestick starting at 12 noon munchtime so check it then to see if the MACD goes possie d, or not. The stock market is trying to encourage itself with positive affirmations like Stuart Smalley in the old SNL skit.

Note Added 12:54 PM EST: It is interesting that Keybot the Quant flipped short today after one-month on the long side. On the SPX 2-hour chart, the SPX price sinks to 4337 right now and the MACD line remains weak and bleak. The RSI leaks a hair lower than the other day so the bears cheer and throw confetti. The histogram, stochastics and other indicators remain possie d. Calling bottoms is like herding kittens. You have to wait for everything to line up with possie d. The RSI leaking lower indicates that the weakness may last a bit longer so instead of a bottom this afternoon it may leak into tomorrow. Price is making matching or lower lows so simply watch for the MACD line and RSI to go possie d to call the bottom. The next candlestick begins at 2 PM EST then 9:30 AM then 10 AM then 12 noon munchtime tomorrow. These candlesticks will tell you if the bottom is in for the 2-hour timeframe or if the weakness will linger for another day or three.

Note Added 7:04 PM EST: The SPX remains soggy since banks, copper, commodities and utes remain soggy. On the 2-hour chart, the RSI and MACD are sloping lower, weak and bleak, wanting more price lows, while the histo, stochastics and money flow are possie d. Stoch's are oversold agreeable to a bounce. Candlestick-wise, a couple of jog moves are needed to call the bottom so up-down-up-down-up to begin a rally. So that is 2 PM EST-ish tomorrow afternoon for a potential bottom give or take. Don't guess; simply confirm it with the possie d. If the indicators keep sloping lower then SPX price will head lower. Price violates the lower standard deviation band so you can start to sniff out a bottom coming in the hourly time frame. Bring up the SPX daily chart and you can see the 20-day MA is 4312 so that may be the destination for the near-term bottom in the hourly time frame. Keystone's 80/20 Rule says 2's lead to 8's on the way down so 4320 is a worrisome level since it opens the door to 4280. When the 4312 likely occurs it may be a quick drop down for only a few minutes to 4312 and then a quick recovery. You will know if the chart shows possie d. Thus, for now, and you have to watch how the charts progress and if there is any news, stocks should continue lower with fits and starts tomorrow perhaps targeting 4312, then a bottom late tomorrow or Wednesday morning and relief rally for a few days say into the holiday weekend and stocks are usually bullish into a holiday weekend. July 4th is not until Tuesday but the party begins on Thursday and Friday for Americans so there will be some bad honky-tonker's laying it down, as Stevie used to sing and play. The daily chart remains weak and bleak so after the relief rally in the back half of this week, the downside will resume and take out new lows after the holiday respecting the weakness in the daily timeframe. Watch XLF 32.75. Price is at 32.67 in the bear camp creating stock market weakness. As banks go, so goes the market. Bulls must push XLF above 32.75 as soon as possible or they are in trouble. Check it in the pre-market tomorrow morning and you will know the mood of the stock market. Easy-peasy.

Note Added Wednesday Morning, 6/28/23, at 6:47 AM EST: That was a sloppy bottom yesterday. Economic data creates bullishness that fed on itself for the Tuesday rally. Shorts cover creating more upside fuel and dip-buyers rush in for fear of missing out on a new leg higher. A tech and AI orgy wins the day again leading the stock market higher (overnight, however, there may be new restrictions on chip companies so stocks are soggy again). The low tick in SPX price was late Monday session and yesterday starts with stocks moving higher. On that price low, the RSI and MACD remain weak and bleak so the rally was not a possie d pop; it was news-driven. It tells you that the downside was not done in this 2-hour time frame but was cut short by happy talk. Price moves higher and the last 2 candlesticks are at matching price highs so the indicators can be assessed. The RSI is flat, which is neggie d, but the other indicators continue pointing higher. Softness in the S&P futures are reflected by the RSI but the expectation would be further lift in price until it forms neggie d on the 2-hr chart, unless negative news hits the tape. Once the 9:30 AM, 10 AM and 12 noon candlesticks print on the 2-hour chart, you can get a better idea of where she is going to top. We shall see if she can fill the gap at 4400-4410 before rolling over again. The 20-day MA support at 4320 and rising remains on the table and price will need to show it respect and come down to touch it.