We’re sitting right under the line in the sand. It will be a good sign if the S&P 500 can break above the last pivot high on June 18th of 1654.19. Today’s high was…1654.18!! The Dow Industrial Average also fell short by 20 points of clearing. Until we clear these levels the short-term correction is still in play.
S&P 500 – 3 months (daily)
The Dow Transports broke out higher today, and Small Cap stocks are now making new highs for the year – both of which are good signs. However, the rally over the past week has been fairly weak, on very light volume and momentum is definitely slowing. This could be creating a longer topping process that pushes the correction out into August or September.
This has certainly been a difficult market to maneuver. I haven’t been a big fan of valuations all year but the most important thing is to always follow capital flows. A lot of pieces are in place to push US stocks even higher so I’m still looking to add to some of my favorite positions on any weakness.
I’ll follow-up with an update of what I’m seeing across some other asset classes later this week.
Nick