Rally has neared all-time highs after 20% down in near-record time

Short-term trends in US Equities remain bullish but could face some consolidation after Expiration, given the massive amount of calls being traded vs. Puts based on the CBOE Equity Put/Call ratio. I suspect that Wednesday’s minor drying up in breadth likely could continue to show evidence of less than robust market breadth into next week before a minor pullback gets underway. At present, price has not given any indication of any price weakness that has broken trends, but SPX arguably should have more formidable resistance near 5950 into next week. Meanwhile, “Safe-haven” trades like Gold, Treasuries, Japanese Yen, and/or Swiss Franc have all shown signs of potentially bottoming out, and should begin to turn higher in the back half of May.  Despite the road getting a bit tougher for Equities in the weeks to come, it’s impressive that SPX has nearly pushed back to new highs after having suffered a 20% decline from the peaks in less than 30 days. Overall, I am expecting that SPX should begin to stall out heading into next week, but this process likely takes another 3-4 days. Thereafter, a mild pullback could get underway, which would provide an attractive risk/reward opportunity to buy dips in June.

I’ll keep comments brief for tonight as no meaningful change has occurred in price action, but SPX is closing in on resistance at 5950 while $RSP, the Invesco Equal-weighted SPX, faces its own resistance.  Meanwhile, some of the sentiment gauges I look at suggest that markets could be getting close to a minor trend reversal. I’ll explain below.

QQQ, as shown below, could produce its first evidence of trend exhaustion within three trading days by producing a “TD Combo 13 Countdown” exhaustion signal sometime next week.  While many discussed the TD Sell Setup that occurred on 5/5/25, a combined TD Sell Setup along with a TD Combo signal would likely be far more important in producing a stall in price.

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