Stocks Facing Resistance at Highs
Updated
Stocks have faced fierce resistance at highs, as we mentioned in the last report. Recall that we identified highs as a significant barrier to the S&P 500, and if significant momentum did not come through then we were likely to retrace. This is exactly what we are seeing now. However, we are seeing support at 4693, which we also highlighted in the last report. If this does not hold, we could easily retrace the entire range to support at 4632 and 4649. There is a vacuum zone below to 4580, but as mentioned, the broad range stocks have held since the beginning of this month should hold. We could be in the makings of a bull wedge, suggesting that stocks are gearing up for a breakout. The Kovach OBV is still fairly flat, so we will need to see more momentum come through before considering a breakout.
Note
Just as we wrote in yesterday's report, stocks are holding steady around 4700. We are seeing a flag or triangle type pattern forming. We have PMI and the GDP coming out next week, so we will see how stocks react to these numbers. If the fed keeps sounding hawkish, we could see more weakness in the S&P.
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