The Standard & Poor’s 500 index (SPX) rebounded from its rising 50-dma this week, after a selloff the previous week. This was an almost textbook perfect picture of how markets react in a bull market. “What’s next?” is the question most clients are asking the past few days. Despite the whip-saw volatility over the past four weeks, the technical backdrop has not changed materially.
Weekly indicators, tracking 1-2 quarter shifts, continue to incrementally turn down from overbought levels that developed in early 1Q, and are unlikely to bottom until well into 2Q.
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