When Will the Bull Train End?

We are nearing resistance, but have momentum.

Technical Edge — 

• NYSE Breadth: 69% Upside Volume

• NASDAQ Breadth: 57% Upside Volume

• VIX: ~$22.25

Game Plan: S&P 500, SPY, QQQ, Dollar, CHNG, BA

We are now entering a mixed moment in the markets, in my opinion. We have not seen the upside breadth we need to see (a return of demand) nor the capitulation we need to see in order to call a bottom. 

That doesn’t mean this can’t be the low — it can — and it doesn’t mean the market can’t keep going higher — again, it could. So far, we’ve seen an admittedly impressive dead-cat bounce on low volume. 

As a long-term bull, I hate saying that I don’t believe the low is in and while that observations could pan out to be wrong, that is what I’m seeing at the moment. 

We are now rallying into a key area on the charts, but there have been many improvements. For instance, we’re rallying on “bad news” from the Fed and from lackluster earnings reports. Further, the Fed is forecast to be less aggressive here through year-end vs. what we’ve seen the last few months. 

Can all of that point to an extended rally? 

S&P 500 — ES 

4100 was prior support in June, which held for more than a week as the ES digested a strong three-day move — sound familiar?

Perhaps that’s what we’re in store for again. However, the ES is now butting into the 21-week moving average (which was resistance on SPX and SPY this year), as well as the weekly vWAP measure. 

Further, note that the ES is trading into a prior support zone between 4150 and 4200. It’s not unreasonable to speculate that this could be resistance. 

If we should pull back in the days ahead, I’m looking for support from the 10-day ema and the 4000 level. On the upside, I expect us to slow down as the ES tussles with 4150 to 4200. 

S&P 500 — SPY