More Tight Consolidation?
The S&P 500 has been fighting higher for the last two months. Is a pullback coming, or could there be more new highs in store?
Consider the series of tight ranges on this chart following rallies to new highs. The first jump occurred on June 5 as Nvidia’s market cap shot past $3 trillion. The second was on June 12 after inflation was lower than expected. The third (and latest) was on June 17 as momentum from the previous week lifted prices on a Monday.
SPX held its ground each time without a noteworthy pullback. That potentially reflects a lack of selling pressure. It also resembles price action in November and early December as the current uptrend began.
Second, the index has been finding new support at old resistance. Notice the June 11 bounce at the May 16 high. Also consider how prices have recently held the June 12 high. That’s potentially consistent with bullish trends. (If 5447 breaks, traders may look to 5402 for potential support.)
Third, SPX shrugged off three bearish outside days in the previous eight sessions. The ability to overcome those potentially bearish reversal patterns could suggest that buyers remain in control.
Fourth, the lower study includes our MA speed custom script. It shows how the 50-day simple moving average started rising in June after the pause of April and May. That may reflect an intermediate-term uptrend.
Finally, the Relative Strength Index (RSI) has remained at or near overbought for more than two weeks. While that might sound bearish, such readings can occur repeatedly during bullish runs (like 1995).
John Maynard Keynes famously stated that “markets can remain irrational longer than you can remain solvent.” If he were alive today, might he instead quip that “RSI can remain overbought longer than you can stay on the sidelines?”
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url =tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
Consider the series of tight ranges on this chart following rallies to new highs. The first jump occurred on June 5 as Nvidia’s market cap shot past $3 trillion. The second was on June 12 after inflation was lower than expected. The third (and latest) was on June 17 as momentum from the previous week lifted prices on a Monday.
SPX held its ground each time without a noteworthy pullback. That potentially reflects a lack of selling pressure. It also resembles price action in November and early December as the current uptrend began.
Second, the index has been finding new support at old resistance. Notice the June 11 bounce at the May 16 high. Also consider how prices have recently held the June 12 high. That’s potentially consistent with bullish trends. (If 5447 breaks, traders may look to 5402 for potential support.)
Third, SPX shrugged off three bearish outside days in the previous eight sessions. The ability to overcome those potentially bearish reversal patterns could suggest that buyers remain in control.
Fourth, the lower study includes our MA speed custom script. It shows how the 50-day simple moving average started rising in June after the pause of April and May. That may reflect an intermediate-term uptrend.
Finally, the Relative Strength Index (RSI) has remained at or near overbought for more than two weeks. While that might sound bearish, such readings can occur repeatedly during bullish runs (like 1995).
John Maynard Keynes famously stated that “markets can remain irrational longer than you can remain solvent.” If he were alive today, might he instead quip that “RSI can remain overbought longer than you can stay on the sidelines?”
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url =tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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