Charts & Comment 06/30

s&p 500 daily chart

Updated monthly charts available, with a brief comment included on some.

Long term, the S&P 500 ETF – SPY monthly is probably painting a more clear picture about what’s coming this Summer or Fall, than what the S&P 500 index is able to do these days.

The SPY touched major trendline resistance at the high in June, before falling back and closed near the low, forming a Pin bar, which often warns about market reversals, especially when they show up near important resistance like now.

In addition, SPY’s monthly RSI-25 has reached roughly the same levels as observed around the 2000, 2007 and 2014 tops.

Another important technical point, is that a full five wave structure can be counted from the 2009 major low. When this is a fact, then it’s just a question of when the tide is turning, as wave 5 can stretch out further.

But in this case, a higher probability confirmation of a major top in place, would be a clear monthly close below trendline support, seen on the same chart. To me, that would be a hard technical signal to get out of any stocks on the Long side.

Short term, due to the complex market development in June, i suspect a broadening wedge could be forming, a likely scenario which can’t be ignored at this point.

If so, another push towards upper wedge resistance is looked for and then one more leg towards the lower part of it, to complete a one degree higher wave d this summer, before once again heading higher in the last wave e, into the coming Fall.

Any clear break below wedge and trendline support right away next week, would probably negate this possibility and could instead mean the wave e already completed at the June high.

Weekly momentum is bearish and has just left it’s overbought territory. Any clear break (closing basis) below important trendline support around 1060-55, could open up for more weakness towards the next lower trendline.

The Bond market, using the TLT weekly as a proxy, reversed lower from the 50% retracement area, after what looks like a completed a-b-c corrective wave 4 structure from the late 2016 low. If so, higher interest rates could be the outcome, mid & long term, which could also put pressure on the stock market.

The Dollar is also weakening and with the recent break of important support, i can’t see any significant support before the August 2016 low (94 area) is reached. If this one fails to hold, it could even go for a test of the important May 2016 low (92 area) sooner or later.

The S&P 100 BPI (Bullish Percent Index) daily Sentiment chart

The Neural Net System is Long on the S&P 100 weekly.

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