while the overall technical backdrop remains bullish, recent rally has created overbought conditions. With this in mind, we’d look to reduce exposure into overbought strength, which might take the S&P closer to 2800 before a significant pullback unfolds
S&P has confirmed a breakout above key resistance in a reflection of improved momentums. Nevertheless, the return of overbought conditions on intraday basis increases the probability for some short-term downside retracement prior to new upswing
Monday’s upside follow-through confirmed last week’s bullish breakout and opened up for a test of the more important resistance near the 2600-2640 zone. Near-term technical backdrop has been strengthened but does not appeared strong enough to generate sustain breakouts. With this in in mind, we would consider taking down exposure into additional strength, which we think could take the S&P closer to the trend channel moving average before a significant pullback unfolds
current price structure suggests that the S&P is in a process of establishing a near-term support plateau from where a new up-leg will base and climb in the days ahead.