SPX Divergence Watch

 

From August 24 through September 22 SPX has gained 112 points, while momentum lost 62

Price strength alongside declining momentum indicates weakening market internal —but not yet an outright sell signal.

Historically, comparable divergences produced:

Horizon	Avg SPX move	Positive
3 days	+9 points	60%
5 days	+13 points	60%
10 days	+31 points	73%

Base case: Near-term consolidation followed by another attempt higher.

• 3–5 day target: approximately 7,775–7,780
• 10-day target: approximately 7,795
• Bull confirmation: sustained move above 7,800
• First support: 7,630–7,650
• Major support: 7,550–7,590

Bottom Line

The divergence is a yellow flag, not a red flag. Historical behavior favors modest additional upside over 10 trading days, but deteriorating internals raise the probability of volatility or a pullback first. A break below 7,630 would shift the outlook bearish.

SPY Market Update

 

SPY closed at 773.50, up 1.55%, on 50.5 million shares. The rebound from the September 16 low has restored the 759 pivot and carried price directly into the short-channel ceiling at 773.85. The setup is constructive, but not yet confirmed: price remains below the 779.37 swing high while the daily channel oscillator is stretched at 96.51.

What Matters Next

·        Bullish confirmation: A daily close above 773.85 with volume at or above 45 million would turn resistance into support and bring 779.37 into focus, followed by the weekly channel top near 789.45.

·        Bearish confirmation: A rejection from 773.85 followed by a close below 766.03 would favor a pullback toward 759.00, then 754.05.

·        Current stance: Lean bullish, but with low conviction until price resolves the channel test. The combination of stronger volume and reclaimed support is positive; the extended oscillator argues against chasing.

Bottom line: 

• 779.37 is the line in the sand. A daily close above it invalidates the range read entirely . A close below 763.85 (EMA20) does the same on the downside.
• A Trump–Xi summit on Sep 24 sits just before the Sep 25 expiry and presents a headline gap risk that the 11% IV is not pricing.