Market Summary:
The June 28 report highlighted my expectation that the SPX index would “test support at 5400 in the near term with the additional downside risk of filling the 5375-5400 gap and potentially testing 5300”. The bullish gap up on June 12 had seemed to run its course and as my momentum and trend signals faded/diverged from higher prices I felt that risk was skewed to the downside. I did note in that same report that “a break above 5500 with confirming momentum counts would shift my view”. The index has clearly rallied well above 5500, closing the holiday week out at 5567 (albeit on light volume). However, momentum has not confirmed this bullish move. Price is king. As such, the obvious call here is to be bullish and expect an upside target of 5600 to be achieved in the near term. I would add a good note of caution to that as my model continues to flash weak market internals producing the potential for a quick and aggressive counter trend move to the downside. Bullish here is perfectly logical based on price but I remain cautious with a light book until the divergence between price and internals resolve themselves (to the upside or downside).
Trade Support:
5500: June 20 High
5489: 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:
5600: Even Upside Target
5715: Price Projection based on the April 19 low (ref 4953)
