Market Summary:
In yesterday’s report I noted the gap up in the SPX on June 12th from 5375 to 5400 (see chart). The 5400 level continues to act as crucial support. Consolidation and a hold above this level with confirming internals would suggest the index is setting up to break out above the previous all-time high of 5505. However, as I mentioned yesterday “a reversal looks more likely as last week ended with shorter-term market trends and momentum fading”. Price action yesterday increased my confidence that the index is setting up to break below 5400. After hitting an early session high of 5490, the index consolidated and faded to close on the low at 5447. Bearish price action with confirming/fading internals are setting up for a test of 5400 at a minimum. Again, sellers will be ready to hit the button if support at 5400 doesn’t hold setting up for a move lower as deep as 5300.
Trade Support:
5436: 10dma
5400: Low/Base of the June 12 Gap
5300: Downside Target based on a 100-point measured move and 38.2% Retracement
Trade Resistance:
5500: June 20 High
