SPX S&P 500 2-Hour Chart Positive Divergence Lower Band Violation

Let's zoom in closer on the 2-hour chart after the Tuesday session ends. Two more candlesticks print since about 4 hours of trading time has passed since the previous 2-hour chart. The MACD line is key and it continues to slope lower (red line) by a hair. Over the last five candlesticks, the RSI, histogram, stochastics and money flow are positively diverged wanting to see a bounce in price. The MACD line, however, and perhaps the money flow that is essentially flat, want to see another lower low in price after any bounce. Thus, stocks may need say two more candlesticks to properly bottom when price is at a lower low with the MACD line positively diverging (sloping upwards). That will verify the bottom is in. Two candlesticks is 4 hours of trading time so a bottom would be anticipated tomorrow (Wednesday).

The middle band is on the table since the lower band was violated. This is also the 20 MA that is at 1917 and falling. The key horizontal price support and resistance levels are at 1924, 1897, 1884, 1878, 1874, 1872 and 1848. Note how price parked itself exactly on Keystone's strong 1884 S/R level. The 1897 is a logical upside target. If it takes a couple candlesticks for the MACD line to positively diverge, the middle band will be down at 1905-1910 by then. Then if price bounces, with the middle band dropping, the 1897-1910 range is a logical upside target.

The CPC and CPCE put/calls remain elevated showing fear in the markets so a near-term market bottom should occur at any time. The TRIN Arms Index is wild printing an uber high reading near 3 on Monday that helped create the rally in stocks at this morning's opening bell, but the TRIN drops to 0.6 in the uber bullish territory. This may create some initial selling Wednesday which would be in tune with the chart above taking a couple candlesticks to set up with possie d with the MACD line.

Thus, mixing the analysis together and sprinkling some magic dust on it, stocks should bottom tomorrow say late morning perhaps in sync with the European markets closing and an upside target of 1897-1910 is in play. Of course a dramatic news event can always overrule any analysis and then the chart needs a little time to price that event in. Watch the MACD line; you want to see a lower low in price with the MACD line sloping upwards and you know the bottom is in. 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.