Will it be a pause that refreshes, or a pullback?
Today’s expected vote on the Greek austerity measures will likely trump the current technicals. That being said, here is what I am seeing…
The graph above shows SPY in the top pane, with the middle pane showing the number of stocks above their 5 day moving averages (red line) and the number of stocks in an uptrend (gray histogram). The bottom pane green line is a decliners indicator.
All short term measures (red and green lines) are showing that the market internals have reached a level that typically results in a pause or a pullback. As I’ve said before, the market has an upside bias and so picking short-term tops is more error prone than picking short-term bottoms.
The histogram, which is a longer term measure, shows that that most stocks are not in an uptrend. If we are to see a sustained bounce, the histogram will have to improve. As it stands, we are looking at a bounce in the context of a period of consolidation. Could this bounce continue and in hindsight be the start of a new uptrend? It certainly could, but for now I view it as normal bouncing around within a range.
SPY resistance remains at $130.00. We will want to watch carefully how the market responds to the Greek austerity vote, which I believe will pass. Is the news already baked in, or will the passage of the bailout be the catalyst that sparks a new uptrend?
we will blast through 130. Probably overshoot to 13.20 and then pullback. What do you think?
Futures show a blast upward through 130.00
Next resistance likely at the 50 day average, near 132. This would also fill the gap from late May/early June.