The SPX daily chart looks like a bowl of spaghetti. The 7-week rally is impressive off the October bottom that violated the lower band. The SPX 2-hour chart is set up with neggie d so that says down in the 2-hour time frame, although the US Monthly Jobs Report at 8:0 AM EST may throw a wrench (spanner) into the works.
For the higher high in price on the daily chart today, the RSI is neggie d (bearish). Ditto the histogram, stochastics and money flow. The stoch's are also overbot agreeable to a pullback. However, the MACD line, if you squint and perhaps hold a hand over one eye, continues higher (bullish). It represents fumes remaining in the gas tank that would like to see another high in price after a few-day pullback.
The negatively-diverged indicators will conspire with the neggie d on the 2-hour chart to create a near-term top and a slump in stocks over the next day or few. However, the Jobs Report is a wild card that may cause a massive rally, or selloff, in the morning.
The SPX weekly chart remains bullish so stocks want to be higher a week or few out into the future. Stocks should drop over the next session or two, like the action on Monday and Tuesday, but then rally again due to the strength remaining in the MACD. If this occurs, watch the RSI because it may develop more strength and extend the upside on the daily basis. You don't have to guess. Simply watch the chart progress and it will tell you what is happening.
That's a big volume candle for hump day. The dark blue circles show the big volume days and their prices. The SPX will have to venture lower at some point forward, at least below 3900, to test those prior high volume candlesticks to see who is boss. The SPX rallied big on Wednesday but its volume did not overtake the negativity displayed in September at a lower price (this identifies underlying weakness).
The moving average ribbon shows the mean reversions higher occurring after the SPX fell below the 20-day MA below the 50-day MA below the 100 below the 150 below the 200-day MA (green asterisks). When price is too extended to the downside, as the moving average ribbon verifies, then price should rally (mean revert higher). Conversely, when price is extended to the upside above the moving average ribbon, then price should collapse (mean revert lower).
The big excitement the last few days is the test and battle at the 200-day MA at 4048. It is reasonable to expect a back test of the 200, and more importantly, the 10-mth MA at 4058. Price performed a mini intraday back kiss of the 200 as the long lower shadow on the candlestick shows, but price may come down and park overnight at the 4048-ish area.
The 10-month MA at 4058 is far more important so pay attention to the back test at 4058 which should occur over the next days. The amateur hour club watches the 200-day MA while the pro's and old-timer's are watching the 10-mth MA. If price bounces from the 4058 support test, the higher moving averages at 4135-4155 will be tested as bulls send stocks higher. If price dies below 4058 heading lower, the stock market will be in serious trouble. The SPX is at 4077. The table is set for the drama ahead. Keystone is hungry for some spaghetti.
The 50-wk MA at 4135 and the critical 12-mth MA at 4155 are overhead resistance. The stock market would catapult higher above 4155. These levels will be tested if the SPX stays above 4058. Watch the 10-month MA.
A key cyclical stock market indicator is the SPX 150-day MA slope. The 150-day MA is at 3935 still moving lower signaling the ongoing cyclical bear but the moving average may be starting to flatten. If the 150 is sloping lower, the US stock market is in a cyclical bear market pattern. If the 150 slopes higher, stocks are in a cyclical bull market.
Thus, watch the 150-day like a hawk since it will tell you a lot about the stock market. If the 150-day MA flattens, and then begins curling higher, that is the start of a cyclical bull market so weeks and months of upside can be expected. If, however, the 150 fails to flatten and reverse instead continuing the path lower, Katy bar the door, it will be all over but the crying as the cyclical bear market worsens.
By definition, prices above the moving average pull it higher and if the SPX is below the MA, it pulls it lower. Note the great respect that price shows the 150-day MA over the last 3 weeks with many touches almost every day (purple box). Price then bounced from the confluence of support formed by the 150-day MA, the 100-day MA and 20-day MA/middle band.
On the top side, the SPX just filled the big gap from September (brown circle). There is another gap remaining above at 4200-4230 big enough to drive a truck through it and that may be the goal of the SPX weekly chart for late December and January. 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 Friday Morning, 12/2/22, at 6:08 AM EST: The moving averages for the SPX monthly chart adjust as December begins creating more drama. The 10-month MA is at 4028 and the 12-mth MA is at 4097. The SPX is at 4077 with the Jobs Report 2-1/2 hours away and the opening bell for the regular US trading session 3-1/2 hours away. S&P futures are down -5. A back kiss of the 10-mth MA at 4028 is expected since it is such a critical level. Perhaps after the jobs number? The big dealio is the 12-mth MA at 4097 call it 4097-4100. If the SPX rallies up through 4097-4100, perhaps after the jobs number or in the days and couple-weeks ahead, the US stock market transitions into a cyclical bull market and big upside would be expected ahead. If price runs up to 4097-4100 and fails, that indicates that the US stock market remains in the cyclical bear market pattern and there is lingering trouble ahead well into 2023.
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