S&P sets new high but weakness is mounting

9月30日

Last week, the market traded within a narrow range, yet still managed to reach new highs. The bulls remain in control of both the daily and weekly timeframes, although I’m not entirely comfortable with the structure that has developed over the past five days. Most of the growth occurred during extended hours, while during regular trading hours, the market either remained in a tight range or moved downward. This structure is fragile and could easily break, though I’m not ready to call for shorts just yet.

Firstly, it hasn’t broken. We're still in a bullish wave on the daily timeframe — in the past two weeks, none of the days have closed below the previous day's low. Secondly, even if the structure breaks, we should not expect significant follow-through, as the market remains very bullish.

Here's a quick recap of the key points supporting the bullish thesis (you can find the rest in my previous review):

1. The Fed cut interest rates by 0.5 percentage points, which is positive for both the economy and the stock market for several reasons, such as cheaper borrowing costs.
2. The SPX has reached a new all-time high, which is highly bullish.
3. Both the weekly and daily charts show a strong uptrend.

For the market to reverse, there would need to be a significant shift in sentiment, likely triggered by some fundamental event. From a technical standpoint, the uptrend remains intact as long as the bulls hold the previous major low (538). Until then, any "red" waves should be viewed as mere pullbacks within the broader upward movement.