The S&P 500 had a neutral week after it was all said and done by Friday’s close as the S&P 500 finished the week up .08%. The follow through is not ideal for what the bulls would want to see on a weekly time frame. After an upside breakout from a consolidation, the bulls want to see the move last and increase with intensity. That is not what happened as it was more of a sputter after the breakout rather than follow through.
When it comes to worrying about being in a bear market, we just are not there yet. Both the S&P 500 and All World (ex-USA) Indices are outpacing treasuries with a healthy lead. The stronger of the two is the All World index. They are pretty close and we are coming up to the end of the month, so it will be interesting to see if the relationship holds.
The correction risk is probably a little higher as both breadth indicators are on overbought territory. They are basically in the same position as they were this time last week. These types of reading suggest more sideways to down movement. However, if prices spike and the oscillators become extremely overbought, it is a suggestion for a healthy market and higher prices ahead.
The big item on the economic agenda this week is US GDP. Those numbers are scheduled for release on Thursday morning at 7:30 C.S.T. Last week the FOMC left the federal funds rate unchanged as much expected.
The long-term trend is up as well as the short-term for the time being. We want to see if the price of the S&P 500 can hold above the 2480 level. Most of the stops are relatively far off from current prices and many vehicles have second purchase ranges below their current standings.
by Adam Straseske, CMT