Saturday, June 6, 2015

Like Sands Through The Hourglass

The Market Trend Model (data sheet) remains with a mixed bias as the Nasdaq and Russell 2000 continue to diverge from the S&P 500.  The stock market's sloppy choppy price action of recent weeks will at some point resolve in one direction or another ~ it always does.  Stock market bears and others who clamor for a "10%" correction overlook the market's ability to "correct" in time rather than in price.  In my view the market uptrend remains intact as the last six weeks appear to show a market in consolidation before making its next move up.

The Russell 2000 (chart) looks to lead the charge higher as this index dropped to its lower trend line of support on Friday only to pop up by the end of the day right to the upper end of its three month price channel.  This "drop to pop" price action has been fairly typical in the QE market for months now as central bank monetary policies have conditioned investors to "buy the dips."

The Nasdaq (chart) continues to consolidate above its recent breakout from the 5,000 price level while the S&P 500 (chart) remains below its recent attempts to pierce through the 2,120 price level of resistance.  The S&P 500 is very near oversold levels and a move higher for this index may be on the immediate horizon.

As I noted earlier this week, stocks remain in one of the longest and tightest range bound markets in U.S. history (article).  Should expectations of a second half GDP recovery come to fruition, I would expect the stock market indexes to grind higher. How much higher and for how long stocks can continue to move into new high territory is anyone's guess.  While anything can happen from one day to the next, I continue to see a stock market with its upward trend intact.