SPX S&P 500 Weekly Chart

Keystone has been telling you about the multi-week rally coming for the last 2 months. It's here. The SPX weekly chart bounces off the positive divergence but the picture is more involved. It was not a clean bottom. There was a lot of choppy slop as stocks based and are now rising for 7 weeks.

The green falling wedge, oversold RSI and stochastics, and positive divergence bounce stocks in early June. That was when retail investors panicked for the first time. Also, a big recession fear occurs in Europe so euro and sterling fall and the dollar jumps higher. Markets then go into that choppy slop for a month trying to bottom. When the SPX bounced in June, note that it was only due to the RSI, histogram, stochastics and money flow. The MACD line and ROC remain weak and bleak wanting price to come back down again for lower lows after any rally occurs on the weekly basis.

The neon green line shows 4 weeks of price bottoming at the same general level with positive divergence in all the chart indicators except the MACD and money flow. They are flat and money flow does bottom above the prior bottom so call them pseudo-possie d. It is a nice set up for bulls and stocks pop higher for the last 4 weeks. Those red lines of sogginess, however, hint that the SPX will have to come back down on a weekly basis after it has its upside fun.

The SPX upside on the weekly basis has legs as shown by the long and strong chart indicators. The RSI crosses above 50% into bull territory, by a hair, ditto the stochastics in a stronger move above 50%. The money flow makes a higher high. Ditto the ROC. It looks real good for bulls on the weekly basis.

Price is breaking up and out of the downward-sloping red channels; more bullishness. However, further tests of the bull's will are on tap. The SPX is above the 100-week MA at 4134 and the 20-wk MA at 4100 more bullish stuff. Will there be a battle in this range?

Look back at the daily chart. It is in negative divergence except for the MACD line that wants another high. Thus, the S&P 500 will top out on the daily chart in the days ahead which leads into several days or a week or so of downside on the daily basis (look at prior post for the daily basis analysis).  Since price may become soggy for several days forward after it tops-out probably this week on the daily basis, it would give an excuse for the weekly chart to pull back into that 4100-4134 battle zone. The 100-day MA is at 4118 and the key S/R gauntlet is at 4160 (purple line).

When the daily chart pulls back, it will likely seek 4100-4118 and then dip-buyers will enter in force. The set-up on the weekly chart above is bullish all the way so another leg higher is likely on tap, on the weekly basis, after the daily chart bottoms (probably 1 or 2 weeks out). The SPX taking out 4160 will be a big deal and by the looks of the chart above, its coming. The 20 and 100 MA's are important so it is appropriate for price to come down for back kisses at 4100 and 4134, respectively, to make sure up is the path forward, and the daily time frame would like to accommodate this move.

When the SPX bottomed in June it violated the lower standard deviation band (gold color) so the middle band, which is also the 20 MA, at 4100, was on the table, and it was served. The upper band at 4582 and dropping remains on the table if the bulls start pumping higher and massive short-covering rallies occur, but do not put a lot of stock in this outcome. More realistically the SPX multi-week rally will likely take price to the 50-week MA at 4352. This would be 2 hundo points from here.

Keystone took profits on longs and is not in a rush to jump back in despite all the Mr Brightside stuff above. The Keybot the Quant algorithm remains long the stock market placing a lot of emphasis on UTIL 999.90 this week. There may be some choppy slop on tap again with the daily chart trying to top-out as the weekly chart is full steam ahead higher. Keystone will wait a few days until the daily top is confirmed and the neggie d spankdown occurs, then, when the daily chart bottoms and forms possie d, probably sometime this month, you simply have to watch the chart, that will be a good time to buy long to ride the ongoing rally in the weekly time frame up to its top. The entry into long positions can be timed with the 2-hour and daily charts when they set up with possie d as the month plays out.

Many pundits on television are making prognostications about whether or not THE bottom has occurred in the US stock market. Jackasses. For one, you always have to reference a time frame for any forecast, otherwise, you are a charlatan. So anyone not attaching a time frame to their calls are worthless jerks that simply want more money to come into their funds.

The SPX monthly chart displays weak and bleak MACD and money flow. There is lots of downside ahead on a long-term multi-month basis. It is as plain as the nose on your face.

Thus, the 2-hour time frame still wants to see weakness now. The daily chart wants to see one more high in price during one of the days ahead and that will likely be the top in this time frame. The weekly chart is long and strong signaling a multi-week rally remaining in progress.

The monthly chart wants the SPX to roll over and die after the weekly rally is finished, perhaps in September or October, great months for crashes, and come all the way down taking out this year's lows and heading towards early 2020 lows. It is easy to see that the US stock market can drop another -50% from the current levels over the next year or two.

Stocks may be choppy with some sogginess over the next couple weeks, then up for several weeks into September, then, when the SPX weekly chart tops out with neggie d, likely in September or October, a massive drop is likely on tap. It will be fun.

Trading-wise, Keystone will wait for a few days or week or two, and not chase any further upside due to the set up on the daily chart, even though stocks may run higher early in the week, and then likely play the long side say starting about 2 or 3 weeks from now and exit the longs when the weekly chart goes neggie d, probably in September maybe October, and then go massively short. 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.