MARKET BREADTH SUPPORTS THE RESUMPTION OF THE INTERMEDIATE UP TREND HOWEVER EW WISE THE PATTERN IS SUGGESTING A LARGER CORRECTION.
The Summation index has issued a weekly bullish signal cross. If it remains forceful it could allow the kick off a multi-month up leg.
However, in my opinion, the internal structure of advance from the June 24 low is corrective, therefore it is suggesting that the corrective pattern from the May 22 high is still in progress.
A larger downward pattern is now less likely; hence if price has not resumed the intermediate up trend, price should unfold a contracting pattern, in which case the current up leg is the wave (B) of the assumed Triangle.
In my view from the June 24 low price is unfolding a Double Zig Zag, if this is the case price should be on the verge of concluding the wave (A) of the second Zig Zag. Once the wave (A) is in place I expect a multi-day wave (B) pullback that should bottom not lower than the 50 dma which today stands at 1628.50, the following wave (Y) up should establish the wave (B) of the assumed Triangle with a potential target in the range 1671- 1674.
Despite so far there is no indication of a short-term top we have few overbought metrics such as:
- The NYSE 10d ma of the Adv-Dec Volume:
- The daily stochastic has crossed the overbought line.
In addition the Equity Put/Call Ratio is approaching the area where usually the probability of a short-term pause is likely.
