Those bear flags we discussed last week have since resolved higher.
After a little pop on Friday, today marks a critical follow-through day for the broader market.
But we already talked about how an oversold bounce was basically a foregone conclusion. We literally knew it was coming. The fact that we finally got it is not a bullish data point.
The next step now is to measure and judge the quality of this rally. There could be some bullish evidence there.
I already outlined some of the most important levels I’m paying attention to.
It’s all about VWAPs for the major averages. The large-cap indexes have the August VWAPs, and the SMIDs have the Q4 2023 VWAPs. They’re all right there.
Here’s the S&P 500 drawn up to show the confluence of resistance around this level.
There’s a lot more going on than just the August VWAP. It’s also the pivot low from January, the post-election gap, the 200-day, and the breakdown level of this tactical top. The VWAP from the all-time high is also here.
But don’t forget Fibonacci. It is also the 38% retracement level of the rally off the August lows. And on top of that, it’s the 38% retracement of the current corrective wave.
It’s all right here!
SPY 575 is the line in the sand. It’s so important.
So, here’s what I need to see to turn bullish on the S&P 500 and the broader market over longer timeframes.
I want to see this reaction rally overshoot the 575 level… We closed just north of 574 today… And then I want to see it hold on the subsequent corrective wave.
To me, this would represent a valid failed top and a textbook scoop ‘n score setup.
From there, the next stop should be new all-time highs.
Let’s see it!
Steve
P.S. If you missed our live event today, catch the replay here. Insiders always come out in periods of volatility. The best ones are master dip-buyers. With this in mind, Alfonso and I reviewed some of the top insider buys of the last week and ranked them based on significance.
We also shared some thoughts on our favorite long idea from our universe of insider stocks. It was a lot of fun. Hope you enjoy it!
