A short-term pause looks to be developing for the Standard & Poor’s 500 index as it stalls under resistance at the summer highs between 3000-3029. During the September rally, short-term momentum indicators have moved toward overbought levels. This generally suggests a 2-4 week pullback/pause.

However, the far more important point, particularly for investors versus traders, continues to be the bullish longer-term view that remains in place, suggesting further upside in the 4Q and well into 2020. In other words—and yes the cliché is overused but it is very applicable here—don’t lose sight of the forest for the trees. Stay long stocks.

Regular readers know I remain positive on cyclicals. Take a look at this week’s three panel chart below of the S&P (top panel), the S&P 500 Industrial ETF (XLI) and the S&P 500 Financial ETF (XLF). All three price patterns have been trading sideways above their long-term uptrend represented by a 4-year or 200-week moving average. The bottom line here is that despite all the gloomy recessionary headlines, their 18+ month consolidations are very near to resolving to the upside. These are not bearish charts in my opinion but merely cycle pauses within an ongoing secular bull market similar to what developed in 2016. For ...

Unlock this article with a FREE 30-Day Trial!

An FSI Pro, or FSI Macro subscription is required in order to access this content.

*Free trial available only on a monthly plan

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)