SPX S&P 500 Daily Chart; W Pattern Bottom

The positive divergence (green lines), oversold conditions, falling wedge and lower band violation all pointed to the bounce and relief rally on tap, and it occurs (green arrow). The chart indicators remain long and strong so the US stock market has further to run on the daily basis. Nothing goes up in a straight line so there will be fits and stops but the indicators have fuel and want to see more price highs on the daily basis.

The W pattern bottom is one of the most powerful stock patterns for bulls. When the W forms under the 50 or 200-day MA's, the force is even stronger. When the W forms under both the 50 and 200-day MA's, like now, the upward force is most powerful. The wild card is today's crazy environment with Europe and the UK under duress causing currency fluctuations and the Fed here at home flying around like hawks every 10 minutes (rates are rising).

The top of the W is 3800, to make it simple, so price is about to break out higher, or receive a spankdown from resistance. The bottom of the W pattern is 3580 so that is a 220 difference for an upside target of 4020 if price breaks out above 3800. The big dip lower occurs for the bottom in price at 3520 so factoring that into the W pattern is a 280 difference and upside target of 4080. The upside resistance from September is at 4110-ish. The ultimate path of the SPX mat be towards that 4020-4120 target area. The SPX got nothing unless it breaks above 3800 to kick-in the W pattern power.

All is not lost for bulls if price is rejected at the current 3800 resistance and spanked back down since that action can serve as a right shoulder for an inverted H&S and price would come back up again to test the 3800-ish neckline and likely bust up through (if the chart indicators are long and strong).

The SPX violated the lower band a couple weeks ago so the middle band, which is also the 20-day MA, at 3678, was on the table and upper band at 3817. Price tags the middle band and now almost touches the upper band. The chart looks good for the bulls for the daily time frame.

The 50-day MA at 3877 is below the 200-day MA at 4130 so the death cross remains in play causing mischief in markets. The 150-day MA at 4031 continues sloping  lower which clearly indicates that the US stock market remains in a bear market. A turn to a bull market will not occur until the 150-day MA slopes higher.

Stocks look good on the daily basis. The 2-hour chart hints that the SPX is topping-out so a one or two-day pullback may be in the mix. The SPX weekly chart receives the positive divergence launch and hints at more upside in the weekly time frame although the chart is not overly enthusiastic. 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.