Chopping away here as the market is continuing the pattern of last week. Where the market ripped up followed by chop only to rip up again. This what we have again this week; the europhia of QE Plenty seems to have worn off and and the market is chopping around at these highs deciding what to do. The market will continue to chop till this tight range between 146.22 and 147.18 is broken.
Below is the Daily Chart showing the tight range and the pattern of breakout and consolidate that has occured.A pullback is likely with the PI flashing overbought and the market extended here, but it wouldn’t mean the end of this bull run. A pullback to 144.44 is not a bad thing for this market, it simply means the market wants to retest its breakout and take it from there. A break below this level and its possible we see SPY test the 141.50 level which represents the gap left from the breakout on the ECB announcement. The really worrying point for the bulls would be if the market trades down below this level. This would signal weakness in the last rally and the market will look to test the 139 trendline. The bears still have no control of this market need to hold the market below 147.18 and 148.11. This is still a bull market and any pullbacks should be looked at potential long entries.
Key Levels to Watch:
Support: 146.42, 144.44, 142.25, 141.47, 140.92
Resistance: 147.18, 148.12
Additional signs of a possible pullback are a move upwards in bonds show by TLT climbing the last two days and a VIX at its lowest levels again.