FX:SPX500   S&P 500 index of US listed shares
122 0 4
I keep reading about double tops but I have not seen one though one may be looming in the area of 2110/2111 where $SPX             meets a descending trend line from the highs of last year.

I’m less than certain as to how the markets will react but if there is an adverse reaction it’s essential that the market take out 2085 decisively before a long term short becomes a viable trade.

To the extent that the descending overhead line is resistance and 2085 is major support, we may have a descending triangle in the works which is inherently bearish once 2085 is taken out.

If events prove otherwise, then we may face maddening trading with the bulls having the upper hand. This is nicely illustrated with the ribbon of moving averages which is highly constructive for either higher prices or continued indecision.

And active fund managers are sitting on higher than average levels of cash and are underweight US equities which, from a contrarian view, are both bullish . http://www.naaim.org/programs/naaim-exposure-index/

There is a risk, though, we could see a garden variety correction in the coming week(s) because some of the market internals are getting somewhat stretched, the CNN Fear and Greed index and similar indices are becoming elevated and the McClellan oscillator is in area where one should consider selling rather than buying.

That said, I am inclined to think the market will wait until there is further clarity on the Fed, the Brexit vote and second quarter earnings before making a major move. Yellen will be speaking on Monday and is certain to address to the simply horrible jobs report and how it will influence forward guidance for future rate hikes.

I think one of the reasons the market rebounded on Friday is that prospect for additional rate hikes in June or July has receded.

Insight into to the possibility of a Brexit will not be afforded until later this month while little will be known about earnings until July. Between now and then the market can dither has it has been doing, make a bold move or correct.

In the event there is a correction, the challenge will be determining whether it is a modest pull-back or part of something larger. If 2025 is taken out, I’m inclined to think it would be part of something larger particularly if earnings disappoint and/or there are one or more other distressing developments.
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