S&P 500 (SPY) Trading Outlook: Bulls Hanging On

Mark Newton
s&p 500 etf spy rally higher trend line resistance chart image july 1

S&P 500 (SPY) Trading Outlook (3-5 Days): Bullish

Movement over 306.53 should turn the trend bullish, and will gain conviction over 310.51. Under 298.93 needed to think trend can turn back down

The Pattern is starting to favor a push higher with move back over 306.53 on SPY.

A couple key points. Structurally, downtrends from last week remain intact. Also, momentum, based on MACD remains negative.

However, pattern-wise, the idea of this being still a “Wave” that should lead lower is losing traction. One can now make the argument potentially that this minor consolidation from 6/8 is complete and a push back to challenge June highs can occur, specifically based on its Elliott structure not leading back lower.

The Bottom line, a move down under 300 puts the bearish move back on the Front burner. Movement over 310.51 would warrant pressing longs into mid-July.

Broad Market Commentary

It looks likely that Tuesday’s progress did accomplish enough to suggest a push back to new highs can occur. While DJIA and SPX arguably both remain in near-term downtrends from last week, there was sufficient gains to change the near-term wave structure to something more bullish just as a seasonally positive time gets underway between now and mid-July. The NASDAQ, of course, did take the lead, strength-wise, and is in better shape than either SPX, or DJIA. Looking back, June closed the books with US indices having logged the best quarter in over 20 years, yet insufficient to turn YTD performance positive for either SPX, nor DJIA. Breadth has been good in recent days, and the trend will gain conviction when SPY can officially regain 310.51, which should help prices push back over early June highs. While momentum is lagging after the downturn from June 8-15, the strength of the last couple days certainly seems to be suggesting a different path than originally looked to be the case a week ago. The next 1-2 days should help to add conviction to this view.

More importantly, the next leg up in Precious metals looked to have gotten underway with Tuesday’s strength in both Gold and Silver. Precious metals stocks showed excellent strength with GDX moving back to new weekly highs, and this group should be favored given relatively low levels of yields while the Dollar largely still remains under pressure.

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Author has positions in 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.