S&P at Risk of Major Correction

with the S&P breaking the support level of 2750, the breach targets a likely test of the 2713-2700 zone. If the index fails to attract new buyers then the next stop will be 2630 with the possibility of a major correction to 2500 by late summer

Oversold Conditions likely to Expand

intraday oversold conditions returned with yesterday’s selloff, supporting resumption of a short-term rally. The ability of the S&P to hold up above 2750 is impressive. Nevertheless, we would not rule out a brief dip below this level as momentum remains weak and oversold conditions appear likely to expand before a tradable low is established

Market Internal Deteriorated as S&P Tested Key Support

market internals deteriorated as S&P tests key support. The index could signal a downward trajectory, depending on how it closes over the next few days. Key support is defined by the lower boundary of the pink band, around 2750. If it closes below that level, the next leg is likely lower, and we’re looking at 2700

S&P in Short-term Corrective Mode

after the late May massive rally, stocks digested their gains in a consolidation phase that is giving way to a pullback in the S&P. Support is strong in the 2750 area. While more backing and filling would not be a surprise, a close below that level would see a massive pickup in volatility

S&P must Hurdle and Sustain above 2800 to Strengthen the Bull case

there is currently a test of support at the lower boundary of the pink band. Momentum and Money Flow measure are not favorable over the near to intermediate term, suggesting that this is not a time to be long. What the bulls want to see is S&P stabilizes and climbs above 2800. The longer the index stays below that level, the more vulnerable it is to lower prices. This is the real danger in the current market

S&P in Consolidation Phase Prior to New Upswing

several key technical indicators suggest that S&P is in a midst of a short-term consolidation phase. The fact that the index managed to hold on to most of recent gain despite overbought conditions, indicating an internal strength. This increases the probability that the S&P will break out from current trading range as soon as the market shakes off the excessive bullishness

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