- S&P works higher as it approaches next two major targets.
- Very extended here, so prepare for some potential volatility
The Bottom Line:
The S&P continues to work higher after breaking the range last week and successfully re-testing it this week. As we work our way into major targets, we should expect things to be a bit more volatile as people take profits, however dip buying should remain in place until the targets are acquired. I’m getting very cautious here immediate term. 2485 is a major target and we are only 10 points from it. This is not a place to get overly aggressive with a blind eye.
The other thing I don’t like is this. While price action is king in my world, I much prefer to be aware of bullish targets and have things on the fear side. On July 6th, which was BTW the low, I tweeted a LOL at fear and greed. Why? Because, we knew darn well the market was headed. Higher!. Today, while I do believe 2485 gets acquired (eventually), this is absolutely not the place I want to be adding and in fact, I will be very quick to take some risk off. I am not bearish, I am cautious. I was far more bullish back on July 6th than I am here.
It’s probably fair to start thinking about another (25 point) trading range between 2475 and 2450 which would target 2500.
Additionally, the R2K came withing 10 cents of a major technical target. The inverse H&S from the July 8th breakout. Be careful, everyone I have seen is only focused on the horizontal breakout. This is not a reason to sell, but a place to be aware of. Both the technical target and the upper trend resistance are at the same place. We need to break and hold above the upper trend or we could reverse lower. Not saying which will happen, just pointing out that there is resistance here.
While I have been pretty bullish on these all week, I remain a bit worried due to their lack of participation. If 24.75 can’t hold we headed to 24.50 as the next place to look to be buyer. The longer term trend would still be up, however, it could be setting up for some short term pain. The VWAP from the July highs is still containing this one on the upside. KRE same thing, it is feeling more and more likely that this one wants to retest those lows in the low 54s again. Still trading heavy.
Made a higher high today, continue to want to be a buyer of weakness and looking to fill the gaps and test the 2016 highs around 343 as our next target. With that said, I would not be chasing here, the low risk entries were given early in the week, it’s too extended to chase here.
The above is be used for Informational purposes only. The charts are fact, however my interpretation is an opinion which I am sharing with readers. None of this is a recommendation to buy or sell anything. You must do your own due diligence.