US markets seem to be in a sideways mode. That may set us up nicely for another push into record territory. Or is this market going to surprise us with a sudden drop? We have now started a new lunar green period, so we will find out soon if any fuel is left in the tank.
Let’s have a look at the S&P 500 chart (click for larger image):
The S&P has fallen back to the 1985 support level created by the July highs. A further drop would probably lead to a test of the 1950 level, where we have a long term trend line support.
Technically, the Earl indicator is in bottom territory but has not turned up yet. Meanwhile, the slower Earl2 appears to be forming a weak peak with a potential bearish divergence. The MoM indicator is close to zero, neutral. That’s not an unanimous chorus, offers us no clues. So, I would just watch the mentioned support levels for the coming week.
A major breakout, up or down, is probably coming. If it goes up then 2050-2070 becomes the next target. I am hedging my portfolio until there is more clarity about the next direction.
Good luck,
Danny
LunaticTrader 