Short-term bounce unlikely to exceed SPX 3975 before retest

A bounce looks to be underway, given Tuesday’s prices lifting up to multi-day highs and closing near highs of the session.  While this might seem overdue given the extent of recent weakness, it’s tough to make much of this as being any kind of serious low, and technically I expect resistance to come in Wednesday-Friday at 3850-3975 before prices turn back down for a possible final challenge, and break to new lows into next week.  Treasuries and the US Dollar look to be starting to stabilize and pushing back higher this week, and it’s difficult to expect that recent positive correlation to Equities has been broken.  For trading purposes, it should be right to sell into rallies this week. However, investors will want to wait for a retest and possible break of last week’s lows into next week before considering buying dips.  Given wave structure, DeMark exhaustion and cycles all possibly converging into late Q2, this could prove to be meaningful at a time when many have given up with trying to find lows before proof of a recession has arrived.  My thinking is that lows should materialize when no one expects them.

Yields have held initial support; push back to highs likely into late June before peak and larger rollover

One thing which should prove important to watch carefully is the extent to which Equities continue or break their recent positive correlation with the Treasury market along with moving opposite of the direction of the US Dollar.

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