SPX S&P 500 Daily and 2-Hour Charts; C&H and Inverted H&S Patterns; Critical S/R at 4160; Negative Divergence in Play for 2-Hour Time Frame and Developing in Daily Time Frame

Here are the short-term charts for the S&P 500, the SPX, the United States stock market. There is a lot going on in the spaghetti above. The brown C&H (Cup & Handle) was mentioned on a previous chart. It has a funky double-handle but sometimes you gotta improvise. The base of the cup is 4660 and the brim is at 3918 where the breakout occurs. The difference is 258 so adding that to the brim is a 4176 target and it is there; it is close enough for government work.

Note the three green dots. When you play any breakout long, you buy on the breakout (left green dot), then when price comes back down, you buy on the successful back kiss, then you buy when price breaks up past the initial breakout high. Note how price used the 20-day MA as its launching point once that support was sturdy, then broke up through the 50-day MA, and then came back down for a back kiss to show the 50 respect, which was successful (for bulls), and then the SPX took off higher.

The blue inverted H&S (Head & Shoulders) is in play although it could have used a better right shoulder that would be higher in late June or early July. Nonetheless, the head at 3660 and neckline at 4160 is 5 hundo difference so adding that to the neck is an upside target of 4660, the highs of late March, if price breaks up through the neckline.

The importance of the 4160 support/resistance line is epic. Look at all the touches from April to present (thick purple line). It would be a big deal if price broke out above 4160 and a big deal if it was spanked down and rejected at the 4160 resistance. Well, what's it going to do big shot?

The SPX 2-hour is cooked with neggie d so she should drop today. Keystone sold several longs minutes ago that were trades mentioned and put on a couple months ago including DDD, SHOP, SOXL, ARKK, SSO, QLD and UWM all profitable. RIOT was also bot back then and is still held as a long but is underwater. Keystone is giving it a little more rope to see if it surfaces. Keystone bot some SDS for sh*ts and giggles minutes ago to day trade the forecasted move lower today.

The SPX daily chart does not agree with the 2-hour. The MACD and money flow lines are long and strong wanting to see a higher high in price after a pullback. This would gel with the 2-hour that wants stocks to drop in the 2-hour time frame. Stocks may be soggy today then rally tomorrow to satisfy the MACD and MFI on the daily chart. The Monthly Jobs Report is tomorrow morning at 8:30 AM EST and can send stocks in one direction or the other so it is a wild card. Remember, trading is 5-dimensional chess balancing the minute, hourly, daily, weekly and monthly time frames against each other.

The red lines on the daily chart show the negative divergence in play with the RSI, histogram and stochastics. The stoch's are overbot agreeable to a down move. The RSI is not overbot as yet which gels with the SPX wanting to come back up in the daily time frame once more after a soggy day or two. The neggie d on the daily conspires with the universal neggie d on the 2-hour chart to likely send stocks lower today.

Jobs will impact markets but the SPX should come up again after any sogginess for a day or two to satisfy the long and strong MACD as explained above. You have to roll with the flow and see how the charts develop.

Note that the 150-day MA continues sloping lower which confirms that the US stock market remains mired in a cyclical bear market. The bear market is not over until the 150 flattens and begins edging higher.

The Aroon shows the bullishness is off the charts which agrees with a pullback at hand although as the chart shows, the Aroon can remain elevated for a while. The ADX was last in a strong trend during the down move in June (pink box). That is gone now on this daily basis. The SPX started the current relief rally in June and the ADX now heads higher from late July. If the ADX runs above the high 20's and 30, that will signal a strong trend higher in the daily time frame and lots more new highs will occur going forward.

Watch that crucial 4160 S/R line in the sand. Obviously, bulls win above 4160 and bears win below 4160. 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 10:30 AM EST: The SPX prints a HOD thus far at 4161.29 trying to pierce that 4160 resistance gauntlet but is spanked back, so far. LOD is 4143.83. Whoopsies daisies. Check that, now 4142 for a LOD. The SPX should start to feel the effect of the neggie d on the 2-hour chart shown above.

Note Added 10:43 AM EST: The SPX drops to 4135 working on new lows. The power of neggie d; will it exert itself further today?

Note Added 2:44 PM EST: The SPX trades sideways so far today flatter than a newlywed's soufflé. Stocks may be in a holding pattern until the Jobs Report tablets are brought down from On High tomorrow morning. The last 65-minute trading segment of the session is at hand from 2:55 PM EST to 4:00 PM EST so if a move down occurs, and the neggie d on the 2-hour kicks in, it should start over the coming minutes as the robots adjust their buy and sell programs (the pivots at the segment changes can be up or down). The SPX has crawled out onto a creaking limb today. Will it snap going into the closing bell? SPX is at 4153 seven points below the critical 4160 resistance gauntlet. Do you think they will try and park it at the critical 4160 S/R overnight waiting on the Jobs Report in the morning?.

Note Added 3:16 PM EST: Bingo. The bulls push the SPX  to 4160 to ring the bell.

Note Added 3:25 PM EST: SPX 4154.

Note Added Sunday, 8/7/22: The SPX went on a wild ride late last week as tensions rose around the Jobs Report. The SPX drops to 4107 at Friday's opening bell then recovers to 4152, then drops to 4118, then rallies to finish the session at 4145 only 15 points from the 4160 overhead resistance gauntlet. The SPX parks itself above the 100-day MA support at 4118; bulls are okay unless 4118 fails. The utes help the bulls as long as UTIL remains above 1000 this week; utilities will hurt the bulls if UTIL slips below 1K. The SPX daily chart remains as shown above except the money flow is now neggie d. The MACD continues sloping higher, long and strong, so this will provide juice for one more price high on the daily basis unless negative news occurs. It makes sense that price may come up to tap 4160 again since it is such a critical S/R line. When it does, say tomorrow, look at the MACD to see if it slumps over creating a lower low as price moves higher (negative divergence). If so, the MACD joins the neggie d party and a multi-day downtrend begins. The RSI is a wild card since it did not get to overbot territory as yet. The rally could get more legs and you will see that if the MACD remains long and strong and then the RSI pokes higher. That tells you the RSI wants to get into overbot territory and opens the door to higher numbers before she tops out with neggie d. Utilities will tell you a lot.