SPX S&P 500 Weekly Chart; Moving Average Ribbon; Positive Divergence Developing; 200-Week MA at 2348 Major Support

The SPX weekly chart shows the double top and neggie d spankdown Keystone explained as it occurred. The red lines show the rising wedge pattern and negative divergence across all indicators. The RSI and stochastics were also overbot agreeable to a pullback. The stars had aligned. The bears did a jig of joy in the moonlight as October began, shorting stocks like madmen. All you had to do is look at the chart and the neggie d smackdown was a very easy call. Comically, the television pundits kept telling the masses to buy, buy, buy, when the chart above said sell, sell, sell.

Price violates the lower standard deviation band so a move back to the middle band at 2751 and falling sharply, is on the table. In January, price was extended way above its moving average ribbon and boom, it was smacked lower to the 50-week MA support. The last three month's crash takes price down through the 50 like it was not even there and all the way lower to the 200-week MA at 2348. Write this down and watch it like a hawk because if this fails it is lights out for the stock market (blue circle).

The SPX back kissed the 20 and 50-week MA's after they failed but this ongoing 3-month market crash occurred through the 100-week, 150-week and down to that 200-week MA. Thus, price should retrace upwards to show that 100 respect at 2610. As a couple weeks play out, perhaps that middle standard deviation band falls like a rock to greet the 100-week MA at 2600-2610 to form a confluence; this may act as a magnet for price as January trading is well underway. 

The falling green wedge is bullish. Ditto the overbt RSI and stoch's although the RSI barely touches oversold territory. The positive divergence on the hourly and daily SPX charts bounced price yesterday and are agreeable to more up although as this message is typed the S&P 500 is puking 51 points. This bounce in the very-near term, if price recovers after today's sogginess, should last a few days aided by the RSI and stoch's in the weekly chart above.

However, on the weekly basis, the SPX will roll over again to honor the weak and bleak MACD line. The SPX will want to come down to test that low close at 2400 or all the way down to kiss that 200-week MA at 2348 again. If this occurs, price will make a bounce or die decision from the 200-week pivot and seal the fate of the markets ahead, either glory, or misery.

Price may want to play in the apex of that falling wedge. Considering that the positive divergence is starting to try and form on the weekly, price may want to sideways chop. So the thinking is that the S&P 500 will rally with the Santa Claus Rally into the first couple days of the new year but then weakness again due to the weekly chart but once that MACD line sets up with possie d on the weekly chart, say 2 or 3 weeks from now, that will be a solid bottom for the stock market, on this weekly basis, and a several week rally should begin. So after some continued sogginess in the weekly time frame into mid-January, stocks should rally then into February.

By the time I typed all that windbag commentary above, the SPX is now down 36 points to 2432 on the day. 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.