Can the Bulls Break 1313 on This Thrust Up?

The cash S&P500 formed an uptrending day on Friday and there is not much change in our overall viewpoint at this time. We made low Friday in the former resistance band between 1289 and 1293 as this area is now support. High for the day was made above weak resistance at 1298 and that is where we closed, sitting right on the Dynamic Gann Line that provided resistance Thursday.

The Wilder Directional Movement System remains long from 1297.85 while the Parabolic SAR remains at 1276.84. A price drop below that SAR level (which would also be below the current support line at 1287.61) would put my under-development trading system in a short position.

I am now not so confident that the market will be able to reach last Monday’s high of 1313 on this rally attempt. There is a band of resistance from 1304-1307 and then the down sloping resistance line (dark red) is right above that. There is then resistance at the old high (1313-1315). If the bulls can rally this market past 1315 then the first target is at 1319-1322.

As always, there are two scenarios here. The bullish case is supported by the technicals as both the daily and weekly charts remain on “buy” signals as previously discussed. In this case the market will push above 1313 early this week, make a shallow pullback and then continue to rally (above 1313) into late August. The bearish view is not horribly negative over the short term. It has the market failing here and declining over the next few sessions to below 1274 but holding above the July 28 low of 1234. We then get a quick bounce that again fails at 1313 in later August and is followed by a sharper decline into early September.