New highs for the year-end?

For those who have listened to me, I have been arguing for a low test for SPX around 4200 for weeks. One of the main reasons is that we hadn't seen a positive divergence typically present for a major bottom. However, last week’s ugly action had made the conditions in place for a sustainable rally into the end of the year. See the chart below: SPX has made a low test and even went below 4200 briefly last Friday. Importantly this nasty flash crash was accompanied by a positive divergence that I had been looking for. That's why I think all the conditions are put in place for a solid bottom, a nice launch platform for the year-end rally

For reference, this same type of setup last year enjoyed a 14% gain in the S&P 500 within six weeks. A similar move this year would have the index trading at new highs for the year by Christmas.