SPX S&P 500 2-Hour Chart; Oversold; Falling Wedge; Positive Divergence

Remember, trading is playing 5-dimensional chess constantly assessing the minute, hourly, daily, weekly and monthly timeframes. You can trade within any timeframe, or across a couple of them, or develop a macro-view on the economy and markets assessing all the timeframes together.

The utilities fail which preach doom and gloom ahead (see previous chart). This is interpreted as stocks beginning to drop any time forward and dropping for several weeks with an ugly outcome. If you bring up the SPX weekly chart, the RSI is moving lower, weak and bleak, crossing down into bear territory sub 50%, and the other indicators are weak and bleak wanting to see lower lows in price on the weekly basis.

If you bring up the SPX daily chart, the RSI remains weak and bleak, ditto the MACD line (bearishness ahead). The stochastics on the daily chart are oversold and want a bounce so this will conspire with the 2-hour chart above to create a VST bounce in stocks. The daily and weekly basis, however, want to see lower lows in price on their bases.

That brings us to the 2-hour chart. In this time frame, the chart is clearly trying to bottom. Stochastics are oversold wanting to see a bounce. The falling wedge pattern is bullish. The chart indicators are possie d. You see a bounce occurring now with stocks after the initial drop to 3928 today (watch this number going forward). The 1-hour chart is positively diverged and wanted to see the bounce as well so the hourly timeframe is bull-friendly.

Keystone wanted to catch the bottom today for a quickie trade but it may have already occurred. This mini-rally is not to be chased higher for all the reasons above but if price comes down again and the possie d is in place, a quickie long trade may be fun for a day or two (hourly basis). With the utilities dead, it takes a strong will to hold stocks over the weekend. A Black Monday would not be good if long.

Nonetheless, the lesson is that it is best to hang tight and wait for the 2-hour chart to come back up and form negative divergence. That will kick-in the downside and the daily and weekly charts will likely join the downside fun. So that top on the 2-hour chart above may not be until tomorrow or Monday after the mini-rally plays out (watch for the neggie d to form on the 2-hour chart).

20-day MA is 4065

200 EMA on the SPX 60-minute chart is 4024

50-week MA is 4001

50-day MA is 3982

12-month MA 3959

20-week MA 3956

SPX price is at 3944

200-day MA is 3940

10-month MA 3924

Price came down to 3928 this morning to test that critical 10-month at 3924 that all the old-timer's watch. The interplay between the moving average's support/resistance will tell you the path ahead. A loss of 3940 will set up the test of 3924. 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 10:46 AM EST: You can see the SPX teasing 3940 support over the last few minutes making a bounce or die decision.

Note Added 10:49 AM EST: SPX 3943. The dance along the 3840 tightrope continues. Whoopsies daisies. Back down to 3940 with wobbly legs. Now a jump back to 3943 the ebb and flow, the yin and yang, and the push between bulls and bears continues.

Note Added 10:56 AM EST: SPX 3947. Wheee! Whoopie! The bulls have their chests puffed out and with chins held high are buying stocks thinking a firm bottom is at hand. You know what will happen as explained above. It looks like now a quickie-long trade (scalp) will not work so it is best to sit tight and watch for the neggie d to form on the SPX 2-hour chart and then play the short side.

Note Added Friday Morning, 3/3/23, at 8:22 AM EST: The bulls push the SPX up 30 points, +0.8%, to 3981 back above the 12-mth MA at 3962. This is the battle. Bulls win big above 3962. Bears win big below 3962. With the failure of the utes, the bears would be expected to prevail going forward but the battle has to play out.