U.S. Equities Update: The Good, the Bad, and Near-Term Targets

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

Still no evidence of any real downturn at work, as multiple selloff attempts failed over last few days.

The S&P 500 (NYSEARCA: SPY) is still within striking distance of pushing up to new weekly highs. Best risk/reward is to sell rallies at 2685-2700 into 1/26-28.

In my opinion and analysis, the trend remains bullish near-term and an increasing likelihood of a final push into 2700 which would signify a better risk/reward to sell into.

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Overall, two things give us confidence that stocks have a bit more upside in the coming 2-3 days. Technology strength has improved measurably, as seen by the Equal-weight Technology index v SPX which has broken out above the trendline since last June.

Yesterday’s’ SOX outperformance also helped this sector begin to trend higher and turn up vs the group (which was profiled yesterday as being at a key make-or-break. Second, Financials have rallied up to make-or-break levels given Financials strength, and relatively speaking, this group is challenging a longer-term area of serious resistance created last year when Financials peaked relatively. So both Tech and Financials have broken out and/or are on the verge.

nasdaq futures trading chart rally higher investing bullish price targets january 25

A couple things give caution, however. Price structure remains weak and SPX has now rallied 12% into a serious area of resistance. Additionally, prices along with breadth and momentum have stalled out of late. Overall, until 2710 is exceeded in SPX, this remains a counter-trend rally and should be used to sell on any move into 2685-2710.

However, in the short run, selling here still looks a bit premature given SPX price action alone. However, Treasury yields very well might have started the new trend on yesterday’s breakdown, and this very well might have an effect on the Financials space as it deals with its own possible breakout. The next few days will be key in this regard. Stay tuned.

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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.