When the digesting is done

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):

S&P 500

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,


By Dan

Author of LunaticTrader and Reversal Levels method. Stock market forecasts based on proprietary indicators, seasonal patterns and moon cycles.

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