The war on Syria relief rally brought the SPX back within the congestion zone where it was trading in July and August.
By doing this, SPX has closely followed the seasonal pattern for the year:
There are, however, certain differences between then and now: in July/August the weekly market breadth indicator had peaked and was rolling over; now, it is just turning up from oversold levels and is reaching for the highs of its range:
Looking at the seasonal pattern and taking into consideration market breadth, our targets and resistance levels, we doubt the SPX has enough left in the tank for a clean break above the congestion zone.
In July/August the Qs were in a congestion zone of their own. Now they have broken above that range, and have made new highs:
Currently, they are being held back in part by AAPL, which has broken below the upward sloping daily channel, but has found support at one of several support levels below:
A bounce/consolidation at these levels could provide enough impetus to propell the Qs to our monthly target, which is close by:
Switching over to gold and silver, we note that both metals remain under pressure. The much anticipated bounce in July failed to produce a swing high.
While gold is finding support at the 50% retracement level of the 2008 - 2011 upswing:
Silver hasn't been able to overcome even the 38.2% retracement, but instead, has found support at the 2008 highs:
A failure of both metals to bounce from current technical support levels will be a strong indication that the correction, which started in 2011, hasn't run its course yet.