All indicators were in synch this week, as $SPX finally broke out to new all-time highs. The breakout started with a "90% up day" last Friday, which put the Index on the brink of new all- time highs, and it carried through with $SPX higher each day so far this week. We have targets extending as high as 2205 at this time.
Equity-only put-call ratios finally got with the bullish program, and both have not only rolled over to buy signals, but both have made new relative lows for this year.
The broad stock market has been able to consolidate its strong post-Brexit gains. There was a day and a half of selling this week, but a strong upward reversal by $SPX from 2074 on Wednesday leaves the bulls still in control.However, there is frustration for the bulls, too, because $SPX has not been able to assault the all-time highs. A promising Thursday rally failed at the 2110 level, reinforcing the 2110-2120 area as strong resistance.
Stocks had a violent downside reaction to the Brexit vote in Britain. But while the damage was severe, it was short-lived. Over the past four days, a huge rally has emerged that has nearly wiped out the Brexit losses.
$SPX is now back inside the 2040-2120 trading range that had been containing the markets through April, May, and the first half of June. So, the $SPX chart is in a neutral state once again.
Stocks staged an extremely strong rally yesterday, and S&P futures are up another 15 points in overnight trading. This whipsaw action has left traders and investors alike unsure of what comes next. But the rally improved things greatly from a short-term perspective, and may have had some effect on the intermediate-term as well.
The market remained jittery throughout the week in anticipation of the European "Brexit" vote, and the event didn't disappoint. On the heels of the decision for the United Kingdom to leave the European Union, the S&P 500 sold off tremendously Thursday night. Hence, the market is once again teetering on the important support level of $SPX 2040. Although today's price action is indeed a bit scary, from a longer term perspective the bulls remain in control so long as that support level holds.
The market was marching along towards new highs (albeit slowly) when some modest selling was accompanying by a big increase in volatility. The combination now has the market on its heels.
$SPX ran into resistance in the "usual" area between 2100 and the all-time highs of 2135. It has broken support at 2090 and 2080, and now support at 2040 looms large.
Equity-only put-call ratios have continued to remain on buy signals, despite the recent pullback in the broad market.
The Standard & Poors 500 Index ($SPX) is nearing its all-time highs. But the progress has been rather slow, especially in light of the fact that all of our other indicators are on buy signals. As you can tell from Figure 1, there is heavy resistance all the way up to the all-time highs at 2135 (upper thick red line). The first support level is 2090, and then 2040 below that.
After a strong upside breakout last week from the triangle formation (blue lines in Figure 1), the market has spent this week in a tight range. There has been an improvement in the indicators in general, but the most important indicator -- the price chart of $SPX -- has not really responded.
A clear breakdown and close below 2090 would be a short- term negative, likely calling for a retest of support at 2060. A breakout over 2115 and then 2135 would be very bullish.
