Market Summary:
The SPX index has now achieved a trough-to-peak move of over 7.50% since testing the 50dma (ref 5181) on May 31 with a 5191 low. In just over a month, with limited breadth and almost no retracement, the index has put in an average full year’s gain while hitting over 30 new all-time highs. As I have continued to state, this move has occurred with divergent signals from my model. In fact, I have rarely observed a move of such large magnitude with such divergent underlying signals. Yesterday’s price action (as we hit another new all-time high) created a very tight, bearish Evening Doji Star. The day had a high-low spread of ~21 points with an open-close spread of 0.10 (chart below). This type of price action shows massive indecision at all-time highs and could potentially be a significant reversal day. We will need follow through today and tomorrow to confirm. I remain fully aware of the current and fantastic bull run we are in but I would remain cautious with the current set up here.
Trade Support:
5500: June 20 High
5499: 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)
