SPX S&P 500 Daily and Weekly Charts; Double-Top or M-Top; Overbot; Negative Divergence Developing in Weekly Timeframe

The SPX receives a near-term spankdown as previously explained with the hourly and daily charts. You can see that the 2-leg bull flag pattern plays out. The first leg is 3830 to 4170 or 340 points. The sideways to sideways lower consolidation takes place and then the second leg begins from 4055 so adding 340 is a 4395 target. Bingo. Old guys say bingo a lot.

Also, for sh*ts and giggles, if the second leg begins at 4110, that targets 4450 also achieved so the 2-leg bull is satisfied. The price action then forms the double-top or M-top. No, not a MMMBop, it is an M-top.

The red lines show the negative divergence in play forecasting the neggie d spankdown as previously forecasted for the near-term. Price prints the new high but it comes with all the indicators sloping lower (neggie d) showing that they are out of gas, hence, price drops since there isn't any more fuel remaining in the tank to push the price higher.

Trading is playing multi-dimensional chess so the neggie d spankdown is in the daily time frame. This tells you nothing about other time frames. You have to look at them individually then gather them together for a path forward for price. The indicators remain weak and bleak on the daily chart so further lower lows, on the daily basis, are expected. However, the money flow is flat as price made a lower low so that is positive divergence that hints at a potential bounce setting up (price does not move every day lower until it reverses and then moves every day higher; price has fits and starts as it continues in the direction the divergences dictate).

Note that price has not yet touched the middle band, which is also the 20-day MA at 4382 so it remains firmly on the table as well as the lower band at 4293 that is rising sharply. The SPX daily chart remains bearish but do not be surprised if a touch occurs at 4382 and then price bounces for a day or so to catch its breath.

Expanding the chess board to the weekly time frame, you see price printing matching highs for 3 out of the last 4 weeks. The red lines show negative divergence at play with all the indicators except the MACD which remains long and strong (it still has some fuel, perhaps fumes, in the tank to nudge price back up to the highs on the weekly basis).

The top 2 weeks ago came with the RSI, histo, stochastics and money flow neggie d on the weekly chart so this helps create last week's down move in stocks. However, the MACD is long and strong and says the top on the weekly basis is not yet in.

Thus, the weakness in the daily time frame will need several more days to play out, and then price should come back up due to the long and strong MACD on the weekly basis. When price comes back up in 1 or 2 weeks, the MACD line should go neggie d on the weekly chart, and as long as the other indicators remain weak and bleak, the top will be in on the weekly basis. This is a big deal since it means a multi-week down move is about to begin anytime over the next couple weeks.

Of course, the Federal Reserve may try and save the day as usual, or some other corrupt positive news in the crony capitalism system may occur, which delays the top but that is all it will do; only delay the top by days or another or week or two.

The SPX has not come back to touch the middle band, which is also the 20-wk MA at 4163, in 4 months so it is on the table especially after the top band was tagged. The lower band down at 3841 moving sideways is also on the table for the multi-week down move that is coming. Interestingly, the 200-day MA support is at 3835 moving sideways to sideways up so the 3830-3850 may be a downside magnet over the coming weeks and couple months or so.

The blue and purple lines show the potential outcomes ahead on the weekly basis. The blue path sees price recovering in the week ahead back up to the prior highs, or near there since the chart is weak, and the MACD going neggie d, that will identify the top and then the multi-week down move begins. The purple path shows the continued weakness in the daily time frame making the week ahead a red candlestick and weak week, but then price will recover due to the long and strong MACD and come back up for the multi-week top the following week (if the MACD goes neggie d when price prints the matching or higher high).

So you can see that the daily time frame will be providing continued weakness encouraging the bears but as the daily chart bottoms again, the bears will panic and jump ship, and the dip-buyers will enter, creating the likely up move again. Then, once all the indicators are neggie d on the weekly chart, it's over. Price will fall for many weeks.

Watch utilities. UTIL (DJU; Dow Jones Utilities Index) has to regain 940 this week as a last-ditch effort to prevent a major crash ahead. UTIL begins at 906. Pay close attention. If UTIL languishes in the days ahead, and drops under 9 hundo heading lower, the US stock market will be toast. The multi-week down move will not be a run of the mill -3% pullback, or -5%, or even a -10% correction. The drop will be far more severe, perhaps one for the record books that will have its own Wikipedia page. If UTIL recovers above the 940-950 area over the next week or two, that tells you that the multi-week down move in the SPX will likely not be crash-worthy and instead more minor in nature something like a -3% or -5% pullback.

It will be fun. Let It Drop. In trading, you do not give a sh*t what direction the stock market goes. All that matters is being on the right side of the trade. Take advantage of the crony capitalism system as it breathes its last breaths. 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 Tuesday Morning, 7/11/23, at 5:54 AM EST: UTIL cannot get out of bed falling to 903 continuing to cast a dark shadow over the US stock market for the weeks and months ahead. The SPX drops to the 20-day MA at 4388, almost; the LOD yesterday was 4389. Dip-buyers jump in on the test of the 20-day so the session ends on the positive side. Bulls win above 4388. Bears win below 4388. The 50-day MA support is at 4258 and has not been tested since March.