Market Summary:
The SPX index continues to hold the 10dma (ref 5464) as the trading range has tightened from 5400/5500 to 5450/5500. Although intraday price action is indecisive, the index has achieved higher highs and higher lows over the past three sessions as it grinds back towards the all-time high of 5505. Aside from general concerns such as below average volumes and extremely weak breadth (nothing new) I continue to see my momentum count fade as the index consolidates at current levels (negative divergence). All said, I remain confident that my model is correct, and that risk is skewed to the downside. A break above 5500 with confirming momentum counts would shift my view. Short of that, I do expect the index to test support at 5400 in the near term with the additional downside risk of filling the 5375-5400 gap and potentially testing 5300.
I will be off next week for the 4th of July holiday. I hope everyone enjoys the holiday as well (GBA).
I will issue my next report on Friday, July 5th.
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Trade Support:
5464: 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
