The cash S&P500 formed a classic “inside” day on Friday; this being consolidation of recent gains. The market generally just “sat” upon support as shown by the low being right at the short moving average (thin red line on chart). However, this “do nothing” day did show some signs of bullish strength. For one, the open was above the down sloping resistance line and has thus qualified the break above it. This makes the “Supply & Demand” system bullish although those willing to trade in concert with the larger trend will pass up this opportunity.Traders with an appetite for more risk will be emboldened here by the action on the weekly chart, which flashed a technical “buy” signal at the close Friday. Those viewing that event as granting permission to trade the daily chart might want to consider the Wilder SAR on the daily as a stop loss point: 1202.89; which is just above the current daily chart “support” line.
Once again we start trading right at the top of a band of support (1251-1258 area). A break below that would indicate we may have to retest the recent July 15 low. Above the market the way appears clear until you reach resistance in the 1289-1293 area. Above that there is minor resistance in the 1320 area and strong resistance between 1340 and 1350.
As far as a general roadmap goes I am looking for the recently begun rally from July 15 to last at least until Labor Day (early September) but I do not expect 1440 to be broken.
Finally, I plan to take a brief break over the next week or so. My next posting will be on July 29.
