Two weeks ago we concluded that once the May 20th gap zone is filled, the race to the old highs will be on. That race was won by the Russel 2000, which printed new closing highs in four of the last five days:
The SPX finished the week with a textbook inside day, and presents us with an interesting dilemma: on the one hand, the daily fractal which provided us with clear guidance during the last 10 trading days is suggesting that higher prices are right around the corner,
while on the other hand, the seasonal pattern which the index has followed dilligently all year long, is suggesting that there's another speed bump coming.
Market breadth indicators present us with conflicting signals as well. While daily market breadth is approaching oversold territory:
the weekly indicator is nearing overbought levels:
Forunately, the inside day mentioned in the beginning leaves us with little room for interpretation. We'll remain bullish above 1694 (basis the SPX), neutral between 1671 and 1694, and will turn short-term bearish below 1671.
As for the Qs, a deepening sign of trouble will be a penetration and a drop below the July 11th gap zone: