S&P 500 Signal Today - 02/07: Working Off Froth (Chart)

(MENAFN- Daily Forex) Potential signal:

• I believe that short-term pullbacks are going to be buying opportunities.
• If we do break down from here, I am more than willing to start peeling into a position near the 5400 level, with an eye on the 8500 level but I would do so in increments.

• I have seen quite a bit of sideways action yet again, as we continue to consolidate at relatively elevated levels.
• Ultimately, this is an asset that has been overdone occasionally, but it's not uncommon to see the market simply bounce back and forth in consolidation after doing that, and I believe that's what we are seeing right now.

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Massive Uptrend

The market has been in a massive uptrend for quite some time, and as a result it looks like we are trying to do everything we can to consolidate and work out an idea of whether or not the uptrend can continue. At this point, there's almost nothing out there to suggest that we cannot, and part of what we might be looking at is the“summer doldrums”, when volume drops off in New York. Most traders are thinking about vacationing at this point, and of course there are a lot of questions out there.

We are in an uptrend, and that's something that should not be ignored. Even if we do break down from here, then we could go looking to the 5300 level, which of course is a large, round, psychologically significant figure. The 5300 level also features the 50-Day EMA at the same area, and therefore I think you've got a market that is doing everything it can to find some type of value, and of course“market memory.”

I think at this point in time it is probably a market that will continue to attract a lot of people throwing money at the same handful of stocks, which of course is a very unhealthy sign. However, you can say the same thing about the last several years. In general, this is a market that continues to be noisy, but I think overall the same for 5 stocks will continue to drag the rest of New York right along with it. I had a target of 5504 the end of the year, but we obviously have touched out a couple of times. If and when we can break above there on a weekly close, then we could go much higher.

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