Bullish, But a Sell Signal Flashes

MVB sell signal confirmed as overbought indicators cluster. We remain bullish but vigilant.

Stocks fell sharply yesterday on worries that Fed Chair Powell might be replaced, but then quickly recovered the losses when that proved to be only a rumor. Still, the $SPX chart is strong and the market internals – while overbought in some cases – generally remain positive. There is now resistance at 6300 (this week’s high). There are several support areas: 6200 (this week’s low), the previous highs at 6150, the gap at 6020–6060, and finally 5920. A drop below 5920 would change the chart, and it would no longer be bullish. We don’t expect that to happen, but one can never be certain.

A full McMillan Volatility Band (MVB) sell signal has occurred. The target for this trade is for $SPX to trade at the –4σ band, which is currently at 6030 and rising rapidly. The trade would be stopped out if $SPX were to close back above the +4σ band, which is at 6300 and moving sideways at the moment.