SPX Daily Chart Head and Shoulders (H&S) Pattern

SPX daily chart turned ugly yesterday especially with a couple additional cyclical signals now turning bearish.  The 200-day MA support is toast but look for a back kiss to the 1380-1382 level as time moves along. The RSI and MACD line and histogram are weak and bleak. Ditto stochastics and money flow but these two are eeking out the tiniest bit of positive divergence that will help create some broad market buoyancy. The NYAD chart posted last evening shows the uber low -2436 print which is extreme negativity. Typically, markets need about two to four hours of buoyancy to burn off this bearishness. The NYAD preference would gel together with the tiny green lines showing positive divergence. The futures are up about four or five S&P's as this is written so perhaps the bouancy as described is on tap for the open.

The plot thickens, however.  The RSI and MACD want to see lower lows in price. Thus, any bounce today in the broad indexes should fade with the markets drifting lower again. As pointed out in Keybot the Quant's missive last evening, a market bottom is likely very close, anytime now thru Monday, the trick is, exactly when and from what SPX level? The H&S pattern is in play, dubbed the Quasimodo H&S since the head and left shoulder are at the same level, with head at 1475-ish, neckline at 1400, that is a 75 handle difference, thus, 1400-75 = 1325 as a downside target, which lines up with a key support area. SPX S/R levels to watch moving forward are a neckline back kiss at 1400-1403, 1391, 1382 (200-day MA), 1375, 1369 (12-month MA), 1365 (50-week MA), 1362, 1358, 1345, 1335-1337, 1325-1326, 1314-1316, 1292-1296 and 1285. Remain alert for a near-term market bottom to occur, likely a bounce from 1345 or 1335, perhaps 1325, and any bounce today may simply be a fake-out VST up move, that may peter out by the end of Thursday's session or into Friday. A waterfall crash remains on the table and if it would occur, today or tomorrow would be prime days.  Typically, after a large Wednesday selloff, the Thursday trading day provides a lower low than the Wednesday low so this will be interesting to watch today.

If markets bounce today it may be just to relieve the NYAD bearish pressure, and then the SPX should come down to print lower lows under 1353 with a market bottom occurring any time now thru Monday, with that bounce likely occurring off of either the 1345, 1335 or 1325 levels.  The 1325-1330 area would satisfy the H&S pattern target and an ideal-world place for markets to bounce. 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.