SPX S&P 500 Daily Chart; Positive Divergence; Oversold; Falling Wedge

The sideways choppy slop continues after the October crash. Price drops to a lower low than Halloween and the indicators are positively diverged. Stochastics are oversold. Price collapses into the falling wedge pattern. All these indications are bullish for a dead-cat bounce, and perhaps the start of a relief rally, to occur.

Price is near the lower standard deviation band at 2611 so a potential touch there has to be considered. The middle band at 2714 is on table when price recovers. The MACD line is weak in the very near term which may create chop for a day or two but things are set up well for a bull rally ahead.

Remember when Keystone would post the SPX daily chart this year he would comment on the flat and limp ADX line down at 11. This signaled that the steady rally higher in stocks in July, August, September, was not a strong trend, it was actually a weak trend and getting weaker each time a new price top occurred until early October, when price collapsed. With the stock market selling off, the ADX now jumps above 25 to 37 (purple box) signaling that the downward move in price is a very strong trend (it will likely continue going forward).

The AROON did a negative crossover in early October verifying the pending collapse in stocks. The AROON now performs a positive cross with the green line above the red line which is a feather in the bulls cap.

The CPCE put/call ratio is at a high not seen since February when the exact bottom occurred in the stock market after that large selloff. So a rally should occur in the daily time frame, the near-term, receiving a boost from the excessive bearishness and possie d in the chart above. The weekly chart remains soggy so any long trade in the daily time frame should be watched closely and should only be undertaken with a nimble approach in mind. The SPX weekly chart may set up for a more substantive bottom a couple weeks out. The SPX 2-hour chart is set up with positive divergence across all the indicators so it may launch the SPX higher out of the gate. 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.