Opinion: The stock market is looking for direction and there’s a hopeful sign just ahead

The stock market, as measured by the S&P 500 Index SPX, is testing its support level at 4200, which is also roughly the location of the 200-day Moving Average of SPX.

At the beginning of October, SPX retreated to these same levels, and an oversold rally occurred. But that rally topped out at the declining 20-day Moving Average (as most oversold rallies do), and now we are testing support again. Actually, SPX has fallen below both 4200 and the 200-day Moving Average. That movement has produced another lower low on the chart,…