Bears Hold Bulls Back

Detailed 6 Minute Video

The S&P 500 finished down .61% this week. Price finished the prior week at resistance and it looks like it is holding for now. The S&P 500 is so close to making new highs. This is the second time we have been in this range and price has failed. This past week could be the start of the 2nd leg down in our wedge correction scenario.

As far as worried about a bear market right now, the S&P 500 & All World (ex-USA) Index still have a pretty substantial way to move before it becomes a major concern. Even the current trading range of the S&P 500 is relatively tight from this last pull back which shows the willingness of the bulls to buy in at lower prices. This is the second attempt at a new high and so we want to see if the bulls can come back in and push the S&P 500 higher and once again relegate the bears.

We are still in a correction on the shorter-term. Breadth is basically moving in unison with price right now, so it is not giving us a lot to work with. The only item that sticks out a little bit is that the shorter-term breadth oscillator is in overbought territory right now. Each time it has been in this range recently (last 5 times), the S&P 500 has faltered and at least stayed horizontal. We’ve got the Producer Price Index and Consumer Price Index on the docket for this week. Both sets of numbers have been soft recently. Economists (of Econoday’s consensus) are expecting an uptick in the Consumer Price Index numbers.

The long-term trend is still positive and the short is sideways. Overall, we are still focusing on International markets because of their strength compared to the S&P 500. The Australian Index is so close to coming to fruition, but it still has a little more work to go. We’ve adjusted a couple of stops higher due to advances this past week. We’ll be watching closely to see if the bulls can pull off a victory this week or if the bears continue to hold the reins. Have a great week!

by Adam Straseske, CMT

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