Well, another week of market action is underway and the bears have more to grumble about. Word of an agreement out of Greece sent stocks back up towards 2130 this morning. Over the past 6 months or so, being short offered a nice risk-reward opportunity. Stocks have been restrained by 2120-2130 (and a major fibonacci extension level) while market breadth deteriorated.
BUT, that said, it has likely been a long and trying ordeal for the shorts.
As I type, stocks are sitting within 10 points of all-time highs. And although I believe the near-term upside may be limited, it has been quite a show of resiliency for stocks. As Ryan Detrick pointed out last week in “Where Did All The Bulls Go?“, investors are getting pretty bearish here… and near all-time highs. He also had this to say:
“…to see all this worry with new highs being made is something I’ve never seen in my 15 years at doing this.”
And to add more confusion to the situation, market breadth is still a bit muddled. However, we did see the S&P 500 and NYSE Advance-Decline Lines show some improvement last week. For any significant move higher to “stick”, market bulls will likely need to see new Advance-Decline highs (confirmation).
Below is an updated look at market breadth across several indicators. Perhaps it’s best to keep your head down and pick your spots. It seems to be a pickers market.
The market will eventually see a longer-lasting pullback – but let the price action be your guide.
I think the market will continue to be volatile this summer. Key support levels on the S&P 500Â include: 2065-2070, 2040, and 1980. Key resistance sits just overhead (all-time highs/major Fib). A breakout may see a rally toward the 2200 level near-term.
Thanks for reading.
Twitter:Â @andrewnyquist
The author does not have a position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
