The rally that began with an upside gap move on October 14th has turned out to be very strong, and $SPX has now traded at and closed at a new all-time high. The Dow is very close to following suit, but NASDAQ and the Russell 2000 lag behind. More about that later.
There is still a chance that $SPX is merely at the top of a trading range that extends roughly from 4300 to current levels, at 4550. A clear breakout above 4560 or so would dispel that notion.
After opening lower on Monday, $SPX put on a strong rally, and closed near the highs of the day. Some of the internals did not follow as strongly, but for now the picture remains a more positive one. The downtrend line in $SPX has been broken, and the Index is pushing towards all-time highs at 4545. There are still a couple of gaps below current prices, and it would be a trend-changer if $SPX were to fill the lower one and close below 4372.
The broad stock market has strongly reversed upward over the past 48 hours. Tuesday night, in overnight Globex trading, the S&P futures were trading at 4320. This morning, they are at 4460. That's a pretty big increase in 48 hours.
Sentiment is changing nearly daily, producing wide swings in $SPX. But the Index is still in a downtrend, with lower highs and lower lows on its chart (blue lines in Figure 1). The lower end of the range is just below 4300, as there were several rather strong reversals from that area in the past week. On the upside, there is resistance up to 4465. A broader view shows three support areas (horizontal red lines in Figure 1) at 4233, 4160, and 4060 and, of course, resistance at the all-time highs (4545).
As is often the case, September turned out to be a bearish month, as $SPX made a new all-time high on the 2nd trading day of the month, but then reversed and traded down to the lows of the month on the last trading day. This action has put the $SPX chart in a downtrend, as there are now lower highs and lower lows (on a closing basis). A move below the mid-month low at 4305 would confirm this bearishness. We now enter October, which has a reputation as a "bear killer," but the first part of the month can be ugly before lows are reached later in the month.
$SPX broke down on Monday, September 20th, violating several support levels, including the very important one at 4370. A gap was left on the chart at 4430. In a truly bearish environment, further selling would have followed. Instead $SPX has risen, filled the gap, and closed back above 4430. In addition, several buy signals were registered (although to be fair, there are still some lingering sell signals as well).