Then, once all the bears had been squeezed out of position, it was time for the market to torture the bulls.<\/p>\n
The S&P 500 did that by dropping 70 points intraday on Tuesday. The market erased nearly all of Monday\u2019s gains and left the bulls feeling like they had just spent an afternoon at a CIA waterboarding camp.<\/p>\n
But here\u2019s the thing\u2026 It is torturous market moves like we\u2019ve seen over the past few sessions that make a bottom for the stock market. Let me explain\u2026<\/p>\n
Look at this 60-minute chart of the S&P 500\u2026<\/p>\n
![\"\"](\"https:\/\/www.jeffclarktrader.com\/wp-content\/uploads\/2018\/03\/Screen-Shot-2018-03-28-at-11.21.15.png\")
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Take a look at the setup we had in early February. If you remember back then, you\u2019ll recall I started buying stocks on February 5<\/a>, when the S&P was trading near the 2650 level. Technical indicators were deeply oversold and the Volatility Index (VIX)<\/a> had flashed a buy signal. But there wasn\u2019t any positive divergence on the MACD<\/a> or RSI<\/a>.<\/span><\/p>\n The oversold conditions did help the market rally for a day (or two). But it wasn\u2019t sustainable. All the rally did was allow the technical indicators to come off of oversold conditions, get closer to neutral territory, and give the market some room to push even lower.<\/span><\/p>\n Then\u2026 on that final decline on February 9<\/a>\u2026 we got the positive divergence necessary to fuel a more significant bounce.<\/span><\/p>\n Now look at the recent action. To me it looks quite similar to the early February setup that created the first bounce. Technical indicators were deeply oversold on Friday. And the VIX generated a buy signal on Monday when it closed back inside its Bollinger Bands<\/a>.<\/span><\/p>\n But there wasn\u2019t any positive divergence to help support Monday\u2019s rally. So, just as the early February bounce attempt failed, Monday\u2019s bounce was short-lived as well.<\/span><\/p>\n Now, though, at least we have the chance for a better bottoming setup on the chart. Monday\u2019s rally helped relieve the oversold conditions on the MACD and RSI technical indicators. It brought them back up to neutral territory. Now, if the S&P falls and drops to a lower low \u2013 like something around 2575-ish \u2013 then we\u2019ll almost certainly get positive divergence on the technical indicators.<\/span><\/p>\n That sort of action would help fuel a more significant rally \u2013 perhaps something similar to what happened after the February bottom.<\/span><\/p>\n It doesn\u2019t have to play out this way, of course. The market might find a new way to torture its participants. But it\u2019s worth paying attention to this 60-minute S&P chart.<\/span><\/p>\n If the bottom of this current decline forms like the February decline, then the rally off of the bottom could be quite similar to the 200-point gain the S&P enjoyed in February\u2019s second half.<\/span><\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n P.S. <\/strong>For a majority of investors, this torturous action in the broad market has been nothing but frustrating. But for my Delta Report <\/em>readers, it\u2019s exciting.<\/p>\n That\u2019s because we know how to capitalize on overextended market moves, week after week, with our option trades.<\/p>\n To learn more about how we do this, and why this April could be one of our best months so far this year, click here<\/a>.<\/p>\n Today, another mixed, positive batch of feedback\u2026<\/p>\n I\u2019ve been a subscriber of your service going back several years since your original publisher because I wanted both investment advice and trading advice. I\u2019m very glad that I became a lifetime subscriber on your trading service after you went solo. I\u2019ve studied technicals for many years and love to see how group psychology plays out in the charts.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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