SPX S&P 500 Daily Chart

As per the last charts, the SPX daily chart needed one more price high since the MACD was still long and strong, and that would be expected to be a top on the daily chart. The SPX weekly chart remains bullish and the SPX monthly chart is bearish. So the same dealio is in place and now the daily chart has topped out and is receiving the neggie d spankdown (red lines).

The Monthly Jobs Report and then inflation data created a couple days of euphoric joy for stocks that turned into choppy slop as the daily topped out. The SPX violated the upper standard deviation band so a move back to the middle band, which is also the 20-day MA, at 4165 is on the table, and it occurs.

The lower band at 3973 is on the table. Note how this is also at the 50-day MA at 3969 and rising. Both are heading towards the 4000 round number so keep this in mind as a potential target that acts as a magnet. But first thing is first, and price would need to lose the 100-day MA support at 4091.

The SPX respects the 100, look at the cluster (congestion) in early August, and price will likely want to come down to 4091 and make the bounce or die decision. Sub 4091 opens the door to the 4000 magnet. A bounce from 4091 would send price back up to the 150-day MA at 4197 now serving as resistance.

The slope of the 150-day MA is one of Keystone's key cyclical market indicators and it is sloping lower so the US stock market remains mired in a cyclical bear market pattern.

Price came up to the 200-day MA at 4318 but could not punch above. The SPX was smacked down from the resistance. The black circle shows the death cross (50-day MA crosses down through the 200-day MA). As Keystone always explains, but the media universally fails to understand, price is expected to rally when the death cross occurs. Yes, rally.

It takes a long time and many negative days to curl the 50-day MA downward and have it stab through the 200 so when it finally happens price is due for a bounce. After a small rally occurs, if price rolls over and moves lower, the death cross portends bad things ahead for stocks. If the rally keeps going higher, the death cross will be nullified by a golden cross (50 moves back above the 200). In the SPX daily chart above, the rally occurs right on schedule when the death cross occurs but it rolls over and collapses with the SPX crashing in April and May so obviously the death cross is wreaking havoc and price falls to the June low.

For the 2 big down days, the money flow is actually possie d (green) which is interesting. Bringing up the 2-hour chart for a quick look, it remains weak but the RSI and stochastics are already oversold and setting up with possie d. The MACD is weak and bleak so the 2-hour needs 1 to 3 candlesticks to set up for a bounce in the hourly time frame, which would be tomorrow, Tuesday. The 2-hour chart may conspire with the money flow on the dialy chart around late morning or in the afternoon to create a rally but remember the daily chart remains weak and bleak with the other indicators (price  would be expected to roll back over to the downside on the daily basis after any 1 or 2-day rally).

The RSI and stochastics are about to fall into bear territory below 50% so watch that as a sign for further weakness, or not. Perhaps some weakness will occur in price tomorrow to the 100-day MA at 4091 or down to the 4100 round number, but traders will be getting bullish as munchtime approaches (because the 2-hour chart is setting up with possie d; remember, trading is playing multi-dimensional chess with the time frames).

The daily chart is weak and bleak so if shorts are on, and you are not a nimble trader or day trader, it is likely a good idea to hold them for a few more days but know that a mini-rally on the hourly basis is near and likely starting tomorrow. Keystone is nimble and may sell some shorts in the morning (or as per the 2-hour chart setting up with possie d) and bring on a couple long trades for very short quickie trades lasting probably only a day or two, then flip short again for the rest of the downside on the daily chart. The key to remember is the daily chart wants more downside on the daily basis.

So staying away from the day-trading, keeping it simple, stocks should continue lower on the daily basis until positive divergence forms on the daily chart which may be several days or a week or so out. Then the bullish SPX weekly chart will kick back into gear, with the daily chart that will then be possie d, and create upside for a few weeks. He calls that simple?

At that point, the SPX monthly chart remains negative so after the stock market rallies for a week or few, you will know when it tops-out by watching for the neggie d to set up, stocks will likely begin dropping in earnest.

Attaching some time frames, stocks will likely drop tomorrow morning (Tuesday) but then a rally will begin on the hourly basis sometime during the day tomorrow or from Wednesday morning on but it will only be a short respite of the downside, say a few hours or day or two, and then stocks should drop again from say Thursday or Friday into and perhaps through next week.

At that time, probably late next week or the week of  9/6/22, Labor Day week, the dally chart will form possie d and begin a recovery rally that will have legs for 1 to  4 weeks. This places a significant market top, when the weekly goes neggie d, around mid to late September or early October. 'Tis a great season for an epic market crash.

Of course the Jackson Hole meetings are underway and any soundbites can impact markets. 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.