The S&P 500 is finding it difficult to get above the mid-2400s and is pulling back towards its 50-day moving average, says Ron Meisels at Phases & Cycles.
Furthermore, Meisels suggests there is growing uncertainty about the strength of the bull market, pointing out that the number of NYSE stocks making new 52-week highs (which he says should have expanded as the market rose) has continued to decline.
Meisels thinks the immediate issue is how well the recent 2400 breakout level is going to act as support and whether it can withstand the negative momentum and downwards pressure from two cycles (the 70-day and 39-week cycles). If the S&P 500 moves below 2400 then he says the 2325 to 2350 zone becomes the next downside target (where support from the larger trend channel can be found) and then the rising 200-day moving average at around 2300 (see Chart).
However, despite any declines in the first half of this month, Meisels believes the index will stay above 2300 and that the longer-term uptrend channel will remain firmly intact. He thinks bullish forces will likely regain control in the form of a summer rally that should begin towards the end of July.
Read the full report.