Market Overview – What We Think:
- May 18 index price lows (1291.98—S&P 500) could prove to be near-term bottom and launching pad for Minor Cycle rebound. But lackluster performance of market since that low and still negative short-term trend mean index pricing is not out of woods just yet.
- If May 18 low proves to be bottom of Minor Cycle decline within context of Intermediate Cycle negative, any short-term retracement should prove to be short-lived. Strength would probably do little more than erase “Oversold” readings prior to resetting market for another down leg on Intermediate Cycle.
- Near-term bounce in S&P 500 back toward 1400 on outside is possible before larger Intermediate Cycle takes hold and drives bids lower.
- Best guess on how far entire intermediate negative could ultimately carry would be 1283-1213 if “normal” 40% to 60% pullback develops.
- Since majority of our key indicators did not confirm market strength into recent highs, more selling could bring market pricing into line with negative indicator divergences.
After peaking and creating an intermediate high back on April 2 at 1422.38, the bellwether S&P 500 declined over 9% until May 18 (1291.98) when what now looks like a short-term low was put in place. With the larger Intermediate Cycle still in effect and still exerting downward pressure, we look forward to little drama on the short-term trend except that deeply “Oversold” conditions will be erased. At best we could see price improvement back toward 1400 in the S&P 500 at previous support and a level that is coincident with the upper edge of the 10-Week Price Channel (1403.55 through June 1). Strength to, or toward, that level would be good enough to generate “Neutral” or slightly better readings preliminary to a resumption of larger Intermediate Cycle selling.
Daily S & P 500 Index with Cumulative Volume
Weekly S & P 500 Index with Cumulative Volume