Sometimes after trending down for days or weeks a stock or stock index could be triggered into a selling climax. What happened after the release if the monthly US- CPI report on 10/13/22 could be a selling climax.
The daily S&P 500 (SPX) chart courtesy of Trading View updates the action.
Just after the SPX open it was down 85.46 points. This appeared to be a possible kick off drop down to the low SPX 3,200 area. Then came a huge rally of 193.87 points that continued throughout most of the trading day.
The massive rally triggered a bullish crossover on the daily Stochastic, the RSI moved above its moving average line, and MACD also had a bullish lines crossover. These additional bullish signals come after all three oscillators recorded bullish divergence.
The rally stopped just below the declining trend line connecting the 09/12/22 and 10/05/22 tops. Also, there’s .236 Fibonacci resistance at 3,688.33, the rally high was 3,685.41 . These two factors represent strong resistance.
If the bulls can overcome this resistance it could extend the SPX rally for several days or even several weeks.