The strength in stocks over the past few weeks to start the year has caught many bears offsides. We are likely to see the bear market continue this year, however the recent strength in stocks could see the S&P 500 rise toward 4300 before the next major leg lower.
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One Response
I think we may have seen the peak for this move higher in the SPX. The McClellan Summation Index was at extreme levels and has rolled over. The NYSE cumulative A/D line has dropped below it’s 21 ema, and the OBV line of the SPY has rolled over and is headed lower. Other measures such as percentage of SP500 stocks above their 50, 100, & 200 SMAs are at very high levels. The McClellan Summation Index was at 4400, and that’s a level rarely seen. I don’t know if this is a temporary dip in a move higher, or if it will drop further, but for now I think the momentum has shifted to the downside.