SPX S&P500 Weekly Chart; Oversold; Lower Band Violation; Positive Divergence Developing

The prior SPX 2-hour and daily charts are set up with positive divergence which should bounce price in these hourly and daily time frames. The only thing that can negate the pending bull joy is negative news that hits the wires. Conversely, if positive news occurs, that will be a double-whammy of upside joy for the few-day relief rally. But would it have legs?

The longer duration charts such as the weekly and monthly charts tell the intermediate and long-term perspective. The SPX weekly chart was posted a month ago when Keystone called the bottom. It was smiles all around, and back slaps, as stocks started rallying and it appeared the relief rally had finally arrived. Thwack. Over the weekend a couple weeks ago, the mood turned insanely sour as Americans are now panicked over the runaway inflation caused by President Biden's misguided climate change agenda and war on energy.

The rampant negativity creates the gap-down move over the last 2 weeks with the SPX at 3675 at prices not seen since 2020. The SPX loses the 150-wk MA at 3736 now looking at a potential test of the 200-week MA support at 3503. Let's recap the fun.

On the left side of the chart, is the big drop as the pandemic hit America. March 2020 was a crash but the Biden administration pumped so much money into the economy, stock prices took off like a rocket (stimulus money ends up on Wall Street pumping stocks higher). The massive money-printing and Biden's desired destruction of the oil, gasoline and natural gas industries, creates the runaway inflation that sinks America's mojo.

Remember, the top is not in until all the indicators go neggie d and this occurs as the new year begins (red lines) and whammo, the stock market retreats on Keystone's top call. It is not rocket science. Bonehead managers on Wall Street say you cannot time the markets because they do not know how to do it. Simply use neggie and possie d to call the tops and bottoms, respectively, in any time frame.

The neggie d spankdown occurs in early January and stocks sink for the last half-year. The green lines show the bounce in the weekly time frame a month ago due to the positive divergence then of course the overwhelming negative news flow from the media creates panic selling. Typically, when a chart is set up with universal possie d, and then news comes out of nowhere spanking price down to a lower low, the chart will simply set up again with the positive divergence. In other words, the launch higher is only delayed a short while. This is true for any time frames and is also true when charts set up with neggie d (at the all-time top in January, good news may have extended the top into February, but the piece of sh*t would have collapsed that month from universal neggie d that would have set up again).

So now what? Trading is always about what have you done for me lately not in the past. The neon green color is used for the current set up. Price makes the lower low so the indicators can be assessed to see if possie d exists and a potential bottom. All the indicators are positively diverged sans the MACD line that is weak and bleak. Thus, the possie d on the RSI, histo, stochastics and money flow will conspire with the daily and hourly charts and help create the near-term relief rally for a few days.

However, the MACD on the weekly chart wants to see another lower low in price, on the weekly basis, after price bounces. Thus, right away you think of a jog move where price will bounce this week, then next week it will drop again for the matching or lower low in price, and at that time the MACD will likely be possie d (sloping higher), along with the other indicators, so the bottom is in, and stocks will rally for several weeks forward. Thus, a bottom is likely coming for the US stock market, on a weekly basis, over the next 2 weeks. July will likely be a rally month.

There is another scenario and you will know on Tuesday and Wednesday if this occurs. Markets are closed today for the newly hyped Juneteenth holiday. Humorously, on St Patty's Day we are all Irish, so today we can all be black. At 9:30 AM EST tomorrow morning, the US stock market will open for the day session and the weekly chart above will immediately begin printing a new candlestick. It would be beneficial for the bulls to see a matching or lower low in price as the trading week begins. Whatchu talkin' 'bout Willis?

Tomorrow or Wednesday, if price prints the matching or lower price low, the MACD may be possie d, watch it like a hawk, if so, the bottom on the weekly chart is now, in real-time, and the multi-week rally will begin right away, this week. If you want to know where the market will be in a few weeks time, simply watch the MACD line on the weekly chart for the answer. It will tell you when the bottom is in on the weekly basis and when the multi-week rally begins.

Of course, the same caveat is in play where negative news may come out of nowhere further extending the time for the relief rally to develop. Also, the positive flip side. If positive news is coming across the wires, it will be the strong double-whammy of upside that will kick in all the possie d discussed above and launch stocks quickly higher.

The SPX has violated the lower standard deviation band (yellow) so the middle band, which is also the 20-week MA, at 4246, is on the table. The Aroon negative cross occurs in January and if you followed the Aroon indicator and nothing else in technical analysis, you would still be short now and a happy camper watching everyone else lose money this year. The bearish red line, however, is at maximum negativity at 1 hundo, and the bullish green line is in the basement at zero. The two extremes have no further space available so they both have to move in the bullish direction going forward.

The volume candlestick last week shows bigtime selling the most since early 2020 when everyone (the wealthy that own the US stock market) jumped on to the stimulus gravy train that was guaranteed to send stocks to the moon making the wealthy class even more filthy rich. Don't you love the rigged crony capitalism system? It's a joke. Be glad it is in its last throes.

Both of these high volume weeks, the 3000-3200 in 2020 and last week at 3600-3800 are important SPX levels going forward. The 3000-3200 will likely need tested in the future and Keystone's 80/20 rule says 2's lead to 8's so a rupture of 3200 will hint that 2700-2800 is on the way.

For now, however, in the short term, stocks are set up for a multi-week rally, either beginning this week or next, on the weekly basis. So the big question is what comes after that? Once the rally begins, the weekly chart will set up with negative divergence after a couple-few weeks of rallying and that will tell you when the top is at hand again on the weekly basis probably some time in July.

A look at the monthly chart is required to see the grand picture ahead for US stocks. It's not pretty. If you bring up the SPX monthly chart, the RSI, MACD line, histogram and money flow are all weak and bleak wanting to see a lower low in price after price recovers in the monthly basis. Thus, stocks will enjoy the relief rally on the weekly basis, some will think the bottom is in and the rest of the year will be joyous. These jackasses are going to get annihilated as the year proceeds. Their heads will be on a platter.

The pending rally shown on the weekly chart above should be used to ditch long positions. No wonder why it is difficult for the bulls to gain any traction. The monthly chart is death. It is realistic to expect the SPX to likely end up in the 1500 to 2800 range over the next year or two which is a long way down from here. Have a nice day. Watch the MACD on the SPX weekly chart to know when the multi-week rally begins. 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.