SPX S&P 500 Daily Chart; Oversold; Falling Wedge; Positive Divergence Developing; Lower Band Violation

The SPX daily chart shows a lot of spaghetti on the plate. The blue falling wedge is highlighted which is a bullish pattern. The green lines show positive divergence with the RSI (barely), histogram, stochastics and money flow (barely), along with the oversold stochastics, that create the couple-day bounce. The SPX 2-hour chart previously posted displayed possie d across all its indicators and that conspired with the possie d on the daily to create the bounce, which continues in the futures early this Monday morning.

As you see, however, the MACD line remains weak and bleak. Also, the RSI and money flow are not yet oversold. A lower low is needed to satisfy the MACD line which will probably occur after this near-term bounce. A previous post highlighted all the positive seasonal factors such as EOQ3 window dressing, new month/new quarter money, full moon, a negative month ending positively, etc...., so the bulls have the background market current flowing in their favor this week.

If you bring up the SPX weekly chart, you can clearly see the negative divergence top call that Keystone made and subsequent 4-week pullback that was expected and forecasted. The RSI, MACD and stochastics remain weak and bleak so the broad stock market selling is likely not finished in the weekly time frame. Thus, if you take the above comments and fit them together, this week may be sideways choppy or sideways with an upward bias, then more sogginess on the daily time frame that wants to see a lower low say later this week or next week, then the weekly chart will likely carry stocks lower in the back half of October, the ominous crash month.

Back to the spaghetti above, price violates the lower standard deviation band (yellow) so the middle band, and 20-day MA at 3382, is on the table. Note how the SPX bounced off the 100-day MA at 3206 so pay attention to this moving average support going forward. The gold circle shows the golden cross that occurred in July. The 50-day MA at 3351 is flattening so watch to see if it rolls over and heads lower for a potential death cross meeting with the 200-day MA at 3107 out in October/November.

The pink box shows the 150-day MA at 3051. The Keystone Speculator's 150-Day MA Slope Indicator tells you if your index, sector or individual stock is in a cyclical bull market or cyclical bear. Cyclical means the weeks and months ahead. The 150-day MA had been sloping negatively after the spring selloff placing the US stock market in a cyclical bear. On the left side of the chart, you see the 150 sloping lower; cyclical bear. Then for June, July and August, the 150-day slopes higher ushering in a cyclical bull market; the best that the Federal Reserve's money can buy in this sick crony capitalism system. However, look at the right side of the chart and the pink box. The 150 takes a tick lower ushering in a cyclical bear market. Keep watching the slope of the 150-day MA and you can gauge your positions in the portfolio the same way. If you are long a stock, you better be looking at an upward sloping 150 and visa versa, if short, you want to see that 150 sloping negatively.

This week is a crapshoot. The charts hint at a few days of choppy sideways. The backdrop is bullish in the VST but the first of three presidential debates occurs tomorrow night. Traders may simply wait today and tomorrow to see how that circus unfolds. Consumer Confidence is very important tomorrow morning. The month and third quarter (July, August September) ends Wednesday (EOM; EOQ3). Monthly charts receive the final print. October trading begins Thursday with the PCE inflation data, many Fed member's favorite data, drops along with the ISM and PMI's around the globe. The US Monthly Jobs Report and Consumer Sentiment hit on Friday. Also in the mix is the ECB deciding if they want to print more money, or not, which will obviously impact the euro, which impacts the dollar, which will impact stocks.

S&P futures are up +29 points about 5 hours before the opening bell on Wall Street. VIX 26.95. Both futures and volatility are higher so one of them is wrong. The VIX is spending time above 27 as it begins trading this week. As the previous VIX chart explains, bears got nothing unless they push the VIX above 27.46. Bulls are fine as long as the VIX remains sub 27.46. Copper +0.4%. 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 Tuesday Morning, 9/29/20, at 5:30 AM EST: The SPX prints a big gain on Monday up 53 points, +1.6%, to 3352. The 50-day MA resistance is at the 3353 palindrome. Price stops here ahead of the Tuesday trading day and presidential debate this evening. The 20-day MA is at 3374 moving lower so this is the next resistance if the 3353 palindrome gives way. Simply mix the 3352, 3353 and 3374 together in a soup; call it a confluence at 3350-3370. Bulls win big above 3370. Bears win big below 3350. The CPC drops to 0.77 and the CPCE is down to 0.45. Wheee! Whooopie! The bull party remains in full swing. Aunt Mabel, typically very frugal with her money, took her entire life savings out of the bank and bot AAPL, AMZN and TSLA stock because she needs the big gains for her retirement. Father John, the local pastor, secretly used last week's collection basket money to buy the triple Q's. He says he is doing God's work; just like GS said they were doing during the Great Recession a decade ago. The stock market bulls remain uber complacent and fearless. They still need to be taught a lesson and interestingly, the October crash month is nigh.