US equities to breakout

June could be the month where trading range uncertainty is resolved for US equities, according to Ron Meisels, President of independent research house Phases & Cycles.

Meisels says that despite negative signals from the Dow Transports (which has negative momentum divergence and a 50-day Moving Average that is turning down and is already below the 200-day Moving Average), Dow Theory is bullish and will remain so until the Dow Industrials and the S&P 500 confirm the Transports’ negativity.

He points out that cyclical forces are in fact turning positive as we move into June and Technology is showing strong leadership. “If the S&P 500 eventually breaks above its sideways movement, then the last few months will look like a very powerful consolidation and base for much higher prices.”

Meisels cautions however that there may still be one final push by bearish forces in the form of a modest 2 to 3 percent pullback, but if key supports hold this should finally exhaust the selling pressure and New York and Toronto can then begin new up-legs.

Read the full report, which includes an outlook for the S&P 500, Dow Industrials, TSX and FTSE.