Equities are exhibiting some of the characteristics of the rally that was initiated back in December 24, 2018 – A near vertical rally off the lows. If the current rally in the S&P 500 (SPX) is sustainable, the Breadth Thrust indicator can help. The Breadth Thrust indicator is an analysis of the advance/decline ratio. When the Breadth Thrust gets to the 70% level, that’s a strong reading, but when it gets to the 90% level, that’s indicative of bullish staying power. A few more trading days will provide some clarity.
The Nasdaq ETF (QQQ) can also provide some clues as to fade or stay with this strong bounce. Currently the QQQ closed with a TD Sell Setup @2. A TD Sell Setup @3 and @4 closes above the TDST Resistance at 183.04 usually leads to a qualified TD Sell Setup @9. Couple that with a Breadth Thrust at 90%, equities could set up to challenge the highs.
While the markets are acting bullish, a reversal back to the bearish option would start when stocks trade below the short term TDST Support levels at 2830. Unless that level is breached in the first couple days of the beginning of the week, the SPX has a good opportunity to continue to rally through the end of the week where price exhaustion signals become more significant.
S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH
Bearish if SPX closes below 2843.61 at the close of Monday, June 10, 2019
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BULLISH
Neutral if SPX closes below 2803.27 at the close of Monday, June 10, 2019
S&P 500 (SPX) INTERMEDIATE TERM OUTLOOK: BEARISH
Neutral if SPX closes above 2859.53 at the close of Friday, June 14, 2019
S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL
Bearish if SPX closes below 2784.49 at the close of Friday, June 28, 2019