SPX S&P 500 Weekly Chart; Expansion Pattern Long-Term; Rising Wedge Pattern Short-Term

Everyone is on the doom and gloom train headed for Hades. Come on, now. When was the last time the consensus was right? Financial pundits and talking heads say the top is in and stocks will drop in the near-term. Most are also sour for 2023. Even Mike Wilson at Morgan Stanley, that was thinking a week ago that SPX 4150 may be the top target, has abandoned that call as he hops on the bear wagon predicting gloomy skies from here forward.

Perhaps the SPX weekly chart can provide clarity on the situation and the chart is a colorful bowl of spaghetti or maybe a Jackson Pollock. Stocks rally off the October lows bouncing off the 200-week MA at 3653. Price regains the 150-wk MA at 3877 and then notice the respect the SPX shows to the 20-wk MA at 3933. The S&P 500 respectfully touches the 20-wk MA 6 of the last 7 weeks. This means the 20-wk MA at 3933 carries clout. Bulls win big above 3933. Bears win big below 3933. Price is at 3964.

Price is bumping its head against the well-established top purple trend line. The two purple lines are a downward-sloping expansion pattern which leads to doom and gloom for stocks in the year and two ahead. Keystone likes purple crayons because they taste the best. So now you watch to see if price overshoots the upper purple trend line testing its limits.

The red rising wedge pattern is a bearish pattern but price has not moved up into the apex as yet. You can draw that red wedge tighter and the top in price, on this weekly basis, may target the downward-moving 50-wk MA at 4119. The 100-wk MA is above that at 4201. Wha, wha, wha, whaaat!! Everyone on Wall Street is bearish, some triple-leveraged to the short side, so why are these higher numbers mentioned? It is blasphemy! Maybe the chart indicators can tell us something.

During the couple-month rally in stocks, and higher price highs, the indicators remain long and strong (green) heading higher, as price heads higher, so there is more fuel in the tank for higher highs in price on the weekly basis. Money flow is negatively diverged so it introduces the sogginess in stocks this week.

The SPX price candlestick for this week did not start at a matching price high to last week's candle so the chart indicators cannot be assessed for divergence over the last 2 weeks, but for sh*ts and giggles, let's say this week's candlestick made a matching price high to last week's candlestick. If so, the RSI, MACD and money flow would be negatively diverged right now but the MACD and stochastics are still long and strong wanting a higher high in price on the weekly basis (there is buoyancy in the SPX on the weekly basis).

The chart says up on the weekly basis contrary to everyone on Wall Street. It won't be the first time. Price is testing the lower red trend line of the rising wedge so price may bounce from here and next week a happier week for bulls may appear with a move above 4000 maybe 4100.

Everyone may be surprised at a big rally over the next week or two especially since everyone is short and slapping each other on the back telling one another how smart they all are. The Fed decision is next week, Wednesday, 12/14/22, so something is going to hit the fan then; it is a wild card. Stocks are usually bullish into the Fed meetings. Tax loss selling usually occurs early December and that may be a good excuse for this week's sogginess but much of that may be out of the way now.

So what does all this mumbo-jumbo and windbag oration mean? The SPX should rally on the weekly basis going forward for 1 to 4 weeks. You know how to spot neggie d; that will tell you when the top is in on the weekly basis. Wait for price to make a matching or higher high and then look at the chart indicators to see if they are all sloping down (negatively), if so, they are all in neggie d and the top is in and the spankdown will occur on the weekly basis. The chart is not there yet.

The money flow is the only indicator that has given up on the rally in the weekly time frame. The bears have more wood to chop to create a top on the SPX weekly chart but everybody and his bro are already quadruple-short the stock market expecting things to fall apart here forward. Someone is going to be right, and someone is going to be wrong. What do you think?

The following important moving averages are in play;

20-mth MA 4236
100-wk MA 4201
50-wk MA 4119
12-mth MA 4088 (dictates cyclical bull vs. cyclical bear)
200-day MA 4039
10-mth MA 4017 (old timer's key level; 12-mth MA will come)
20-day MA 3988
SPX is at 3964
20-wk MA 3933
200 EMA on the SPX 60-minute chart 3933
100-day MA 3930
150-day MA 3928
150-wk MA 3877
50-day MA 3835
200-wk MA 3653

It is interesting that price is above the 200 EMA on the 60-minute because this is a key level and says that stocks are in rally mode for the VST (very short term). Look at that cluster at 3928-3933. That is a support line cast in concrete. If 3928 fails, stocks are in big trouble. If the SPX remains above 3933, the bulls have something to hang their hats on and build on.

On the top side, the first quick test to see if bull's have eaten their spinach is the 20-day MA at 3988. That will lead to more upside if it is taken out and sets up a test of the critically important 10-mth MA at 4017 that old-timer's watch. If 4017 is taken out, the 12-mth MA at 4088 will be tested to see if the US stock market wants to stay in a cyclical bear market, or not. Above 4088 it will be off to the races higher for stocks.

So there are several scenarios possible but gauge the action by the moving averages and watch to see when neggie d forms on the SPX weekly chart to know when the top is in on the weekly basis. The Federal Reserve will create drama next week but judging on the past behavior, and the current set up, stocks may rally strongly into the hump day meeting when Emperor Powell will stand before the financial journalists and turn his thumb up or down, like Caesar in the Colosseum, telling global traders how to trade. Isn't the corrupt crony capitalism system a complete joke? It makes you laugh.

So, as usual, Keystone is sitting by himself with everyone now partying on the bear side of the boat. Oh well, they will come over soon. Stocks will likely surprise everyone and rally for a week or few on the weekly basis. Of course, any news that comes out of left field can change the picture. 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, 12/9/22, at 10:53 AM EST: The inflation data is no big shakes. The SPX drops to 3944 and pops to 3970 and now staggers sideways at 3961. Price feels its oats lower to 3944 towards that concrete support at 3928-3933 but did not test it. Price ventures higher to 3970 but not high enough to test the 20-day MA at 3988. The posturing continues. Watch to see if price breaks through the LOD at 3944 moving lower, or, breaks out above the HOD at 3970 moving higher.

Note Added Friday Morning, 12/9/22, at 11:00 AM EST: Bingo! Old guys say bingo a lot. The S&P 500 pops higher to 3973 the new HOD, above the 3970. The bulls are puffing their chests out and are going to try and finish the week on an upbeat. The 20-day MA resistance is at 3989-3990. HOD 3975. The bulls need another 15 points if they want to prove they are big shots.

Note Added Friday Morning, 12/9/22, at 11:11 AM EST: The SPX fizzles performing a faceplant falling down to 3964 dropping like a rock.

Note Added Saturday Morning, 12/10/22: The stock market is flat all day until 3:15 PM EST when it leaps off the cliff like an Acapulco cliff diver. The SPX falls from 3963 to ...... wait for it....... wait a bit longer for it ...... no, you really need to wait a bit longer for it ........ 3933 the support line in concrete and LOD. The SPX ends the week at 3934. Interesting. The SPX also closed at 3934 on Wednesday. It is a slight nod to bulls that price did not close below 3933 or 3928. The SPX fell all that ways but then could not get the job done when it was knocking at the door. It sets up a showdown for Monday. Bounce or die from the strong 3928-3933 support. If a bounce occurs, "This Train is Bound for Glory." If price dies, collapsing through 3928-3933, the "Highway to Hell" with Angus begins. The expectation remains for higher numbers for the SPX on the weekly basis. It appears that some traders took their chips off the table choosing to wait for the inflation report on Tuesday morning and the Fed decision on Wednesday afternoon.