DecisionPoint Weekly/Monthly Wrap -- Topping In Progress? By Carl Swenlin | July 1, 2017
June has been a tedious month for the market with SPY being confined mostly within a three point range. I can't help noticing the rounded shape of June's price activity, which makes me think we may be seeing a rounded top leading to a period of falling prices. Ha! How refreshing that would be, but the bull market has been very stingy in that regard. Nevertheless, the PMO SELL signal for SPY says there is a chance of some bearish action.
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IT Trend Model: BUY as of 11/15/2016
LT Trend Model: BUY as of 4/1/2016
Price is still well above the bull market rising trend line, and it needs to move closer to it. The PMO SELL signal offers some evidence that the corrective action will likely take place.
The cyclical bull market, visible on the weekly chart, launched off the February 2016 low, and it remains quite robust. The weekly PMO is falling, and implies that price may move back to the rising trend line.
On the monthly chart the rising trend line drawn from the 2009 low defines the current secular bull market. The amount of departure from that line is excessive and needs to close somewhat. The two shorter, more accelerated trend lines are evidence of the start of a parabolic price rise.
Short-Term Market Indicators: These indicators are neutral and not much help at this time.
Intermediate-Term Market Indicators: In this time frame internals are about neutral and are trending in a negative direction.
Conclusion: The charts are telling me that the market is vulnerable right now, but we are in a strong bull market, and that can make a market bulletproof. Bull markets are like that. We can see negative setups, but nothing much happens. The market needs to correct, but it just can't seem to go down. At any rate, I am still expecting price to move sideways or down for a few more weeks. While we are due for a sharp correction, there were two days this week (Tuesday and Thursday) that looked like selling was beginning, but there was no follow through the following day. The market doesn't want to go down. Next week will probably be relatively boring because it is shortened by Independence Day. . .
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