The S&P 500’s next major move will be up and any corrective period in the coming weeks should be seen as a buying opportunity, according to Ron Meisels at Phases & Cycles.
Meisels says that this Autumn has been “stunning” for the bull market, but that a negative divergence has appeared on the S&P 500’s daily. Such a situation he says has occurred four times since 2016 and each time the S&P made a minor pullback of between 2 and 5 percent before resuming its uptrend.
Furthermore, despite some arguments in favour of continued upside acceleration, notably a break above key channel resistance, Meisels thinks that, overall, US equities are overbought and prices are stretched.
Meisels suspects the upcoming quarterly earnings reports season will be the deciding factor as to how the S&P reacts in the short-term; if the S&P reacts to the downside, he will likely see this as a healthy consolidation and as an opportunity to add to long positions.
Read the full report.