Realistic expectations


US stock markets came under pressure again last week, but we didn’t quite get the breakdown that some participants seemed to expect and stocks rebounded by the end of the week. The successful retest of the January 20th low in the S&P 500 and the quick bounce off that level suggests that the path of least resistance may have turned up. Here is the current chart:

^SP500 (Daily)  6_23_2014 - 2_12_2016

The support line just above 1800 is now even more important, and I wouldn’t like to see it revisited if this market is to continue to the upside. Yet another test of the 1800 level would very likely result in a serious selloff. A climb above 1890-1900 would tell us that the new year slide is over and then we can set sights on 1950-2000 again.
Technically the slower Earl2 (orange line) keeps going up, while the Earl (blue line) and MoM indicators are…

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