New All-Time Highs
The S&P 500 index, as represented by the S&P e-Mini futures, hit all-time highs this morning. I noted in my last post that should the market push higher and make new all-time highs, 3200 was the logical target. (You can read that post here: last week’s post.) On all major time frames (monthly, weekly & daily), 3200 is near or at the top of their respective trend channels. You can see this on the accompanying charts.
Also notable on the daily chart is some shortening of the thrust, a level close, and receding volume, despite all-time highs. All of this suggests a pullback is possible. The key level at the moment is Monday’s high at 3,198.75. If we begin trading aggressively down from this level—and especially, if we close below this level, it will encourage sellers to try to move the market lower, perhaps to retest the 3160 level.
But so far, we are holding gains. Sellers aren’t stepping in, at least yet. Lows are still holding higher and we’ve made new all-time highs this morning. So, momentum remains positive to the upside with a seasonal bias apparently running strong and Federal Reserve interventions in the background adding liquidity to the market. Any pullback is more likely to be shallow in this environment. Look for support around 3180 if the market heads down for a couple of days this week. This would give a partial test of the vertical acceleration of Monday and encourage the bulls to try to take the market higher, perhaps up to the 3250 area.
We may retain the overall bullish tone to the market into the end of the year, which is only eight trading days from now. The seasonal bullish bias is typical. But we are also hitting technically overbought levels on the monthly and weekly charts and are just shy of 3215 area where the daily supply line is located. So, be cautious to the upside and we may not see significant downside action until the new year.