If you look at the stochastics in weekly, daily, and hourly time frames on SPY, you will see that yesterday marked basically a triple time frame bullish divergence. This is a powerful bullish set-up. And today's price action confirms the likely bottom completion. I would suggest that the near term outlook is bullish from this point.
I personally view the current market point to be somewhat similar to the July 2008 bottom in SPY. However, the market was more deeply oversold at that point. In the current environment I feel that a major support line in the market has been established in SPY/SP500 at the level of the August and February lows, as well as lows going back to 2014.
IF these lows are broken after a multi week rally attempt from this point, I think that the market could experience a large sell off. We have seen such behavior in gold, silver, and oil in the last 1-2 years. The technical set up was there for a significant bottom (even weekly MACD bullish divergence), but when it was broken, the prices had a lot further to fall. The market was very weak in order to break a low that "should" hold, or that has all the typical sign that it could be a bottom.
The 195-204 level on SPY would be the target range for the top of a "failed" rally which would lead to another break to lower lows, and indicate in all probability a bear market is indeed in place.
Pete
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