Markets continued to march higher last week, and we now have clear breakouts to the upside in place.
Such a strong performance is not unusual in eclipse green periods, as we explained a few weeks ago.
We have another week of green period to go, so further gains are in the cards, but I think we will give back a good portion of the recent gains in the 2nd half of May, when we will enter a new red period.
Let’s have a look at the S&P 500 index (click for larger image):
We got a nice breakout above the 1600 resistance level and now there is further room to rise to 1650 and possibly 1700 later this summer.
Some consolidation is likely later this month, but as long as the S&P doesn’t fall back below 1540 things look pretty good going forward. I would now set sights on a probable summer high (July or early August) around 1700, then a more serious market correction.
My Earl2 indicator turned upwards last week, and the orange line is about to cross above the red line, which would reconfirm a buy signal.