Stats Say Last Week of June May Bode Well for Bulls

Here are this week's key levels.

Technical Edge — 

• NYSE Breadth: 87% Upside Volume (!)

• NASDAQ Breadth: 70% Upside Volume 

• VIX: ~$28.25

Markets are enjoying a solid run over the last few sessions. It can be hard to shift gears between long and short, especially when the bias has been leaning so hard in one direction. While the longer term trends are still pointed lower, it’s possible we could see some more upside target.

Lower trading volumes (ahead of the 4th of July weekend) could combine with the quarter-end rebalance this week. I believe the rebalance may have already begun, but if the stats are of any help, it could help fuel the fire for a strong finish to Q2. 

Further, stocks tend to generate a solid return at quarter-end if they are down on the quarter. 

Game Plan — S&P 500 (ES & SPY), Nasdaq (NQ), ARKK, Energy

S&P 500 — ES 

On Friday, we had a very clear plan coming into the day:

The ES is clearing 3800 this morning, which is incredibly key. If it can hold above this level, then the gap-fill at 3896.50 is a possible upside target, preceded first by last week’s high at 3878.50. 

It cleared all of these levels and then some. Now we’re sitting at an interesting juncture. Up 4 of the last 5 days — and with the lone “down day” a loss of just 0.1% — the ES sits at the 50% retracement and the 21-day moving average. 

If it can clear 3950 and stay above this level, it opens the door to the 61.8% retrace near 3990. I expect the 4000 area to be a tough zone to clear the first time around, assuming it can get that high. 

Keep in mind, the ES bottomed in mid-March and surged 500 points (or 12%) into the quarter-end. If we are in for a similar 12% rally, it would take the ES to 4100, a level of support that failed in early June. 

If we get to the 50-day and/or 4100 area, it may be a reasonable zone to start looking at some downside protection. 

S&P 500 — SPY