Last week we noted that the Vix and the weekly market breadth indicator point to a continued upward move for the major indices. All of them, with the exception of the DJIA, made new highs:
Chart courtesy of OddsTrader
We also shifted our attention from the upward sloping channel to the ascending wedge pattern which became effective after the SPX broke below channel support. At the end of the week, SPY and SPX traded to the top of that wedge:
Given the fact that short-term market breadth indicators are getting overbought, while the weekly readings are in neutral territory, we expect the major indices to enter a brief period of consolidation.
GLD and SLV were able to regain some of the losses from the previous week but still remain in a downtrend, with gold trading below the 50% retracement level:
