In my last post on the S&P 500 Index (SPX), I mentioned 2750 as major resistance and 2680 as near-term support.
Since then, price has bounced around in between those levels, as shown on the daily chart below. At the moment, those two levels are confirmed by a variety of intersecting trendlines...most notably the two red horizontal lines (2748 and 2685), which are the nearest to these two levels.
Until we see a clean break and hold either above or below this red consolidation zone, the SPX will continue its sometimes extreme, volatile whipsaw action in a trendless manner.
It's unclear whether momentum favours a breakout to the upside, inasmuch as the last swing high on the momentum indicator was lower than its previous swing high, in a divergence with the last two swing highs made by the price. However, this may have been intentional and meant to be used as a possible "bear trap" in preparation for the resumption of the rally that began in early April.
Perhaps the month of June will produce either a decisive continuation and confirmation of this 2-month uptrend, or a reversal, which may become clearer after this Friday's employment data is released. Keep a close eye on the momentum indicator to support a "red zone" breakout in either direction.
Inasmuch as the July 4th Independence Day holiday is only a month away, I'd make a wild guess that market players will favour a breakout to the upside, possibly producing a new record high by then before taking some profits to enjoy for the summer holidays...so, we'll see.
* UPDATE June 1...
Two different political reactions to today's employment data...
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| Source: ZeroHedge.com |
The market's reaction as at 2:00 pm ET...
And the Russell 2000 Index hit a new record high today...looks like markets are "buying USA"...
