SPX S&P 500 Daily Chart; Oversold; Positive Divergence; Lower Band Violation; Downward-Sloping Channel Test

The SPX, the S&P 500 Index, the United States stock market, daily chart is shown above at 3698. It looks like a bowl of spaghetti. The SPX is ready for a bounce in the daily time frame as long as negative news does not come across the wires.

The grey lines show the positive divergence in late May where Keystone called the last bottom. Up she went but over the weekend a couple weeks ago the mood turns ultra negative. The high inflation caused by Biden's destruction of the oil, gasoline and natural gas industries creates public angst and fear. Americans are cutting back in all facets of their lives since it costs too much to drive somewhere.

The mini-panic with Joe Sixpack creates the latest round of fear. Traders and investors were screaming to get out of the market because they cannot take the sleepless nights anymore. They are smart. If you can't take the heat, get out of the kitchen. Otherwise, the sharks will eat you. Typically, when a chart sets up with universal possie d, and negative news slaps it again, it is only a matter of days before it sets up positively again. If the indicators are out of downside fuel, they are out of downside fuel. Negative news bites create further weakness but the move lower in price is limited because the indicators are now fueled-up with bull juice for an upside move (possie d).

The green lines show the positive divergence at play across all chart indicators. Note the two matching price lows yesterday and today and with price remaining weak, the RSI, histogram and stochastics are possie d although the MACD line and money flow are a tad weaker in this 1-day time frame. It is not a biggie but these 2 indicators may create a jog move where price is going up today, then down Monday, then it will begin its rally there forward.

Price is violating the lower standard deviation band so the middle band, which is also the 20-day MA, at 3974, is on the table. This is where the middle channel line is also at. There are a couple juicy gaps to fill in there as well. Price is also at the lower trend line of the downward-sloping purple channel hinting that a bounce may be on tap.

The Aroon was ready to signal upside joy a couple weeks ago as the rally was occurring then whammo, a spankdown occurs due to the extreme negativity in news and attitudes and even the Uber guy dreading the recession that is supposed to begin any day. Instead of the Aroon green line crossing up through the red line, they miss each other and the bearish red line remains in euphoric joy territory (excessive bearishness) which typically does not last long. A rally should occur and a green cross should be in the offing in the week or two ahead.

The ADX was never overly enthusiastic about the multi-month selloff in stocks. The pink box shows that February and March was a strong trend lower but this strong trend disappeared in April and May until the end of May. Note how price continues dropping month after month but the ADX does not rise. This means that despite the stock market selling off, the downward trend is not strengthening; it is weakening. If it was full-on doom and gloom going forward, the ADX should be above 30 in late May and now above 35 heading higher. It's not.

The SPX 2-hour chart was ready to bounce with possie d and this set-up remains in play. The SPX is up 19 points as this is typed at 3685 but was up over 30 points a short time ago as the chart above illustrates. The possie d on the 2-hour should continue to send stocks higher and the daily chart should kick in too so stocks should receive their relief rally over the coming hours and days (in these time frames). 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 10:49 AM EST: The Federal Reserve issues comments so people are selling first and asking questions later. The SPX tumbles 30 points to the LOD at 3636. The Fed talks about unconditional support to bring inflation back under control. Stocks are absorbing the news.

Note Added 11:32 AM EST: Stocks recover from the Fed angst with the SPX up 20 points to 3686. Are the market makers scaring the dip-buyer's so they and their buddies can buy more long shares at cheaper prices as the relief rally begins?

Note Added 11:56 AM EST: SPX 3660. VIX 31.666.

Note Added 12:12 PM EST: SPX 3660. VIX 31.29. The VIX is teasing the days low so the Fed has its jackboots on the throat of volatility trying to get stocks to pop. If VIX goes sub 31, stocks will begin flying higher.

Note Added 12:14 PM EST: SPX 3671. VIX 31.06. That was fast. Bulls need a few more pennies lower with VIX and the tape will be happy into the weekend. Traders and investors must view the Fed news as no biggie.

Note Added 12:17 PM EST: SPX 3674. VIX 30.90. Fed members jump on top of Uncle Vix wrestling him to the ground, holding his neck down with their jackboots, making sure stocks are buoyant to protect their wealthy masters.