Technology/Growth looks likely to stall after a great week

The stalling out in S&P looks to be starting as of Friday, with a minor 1% pullback in S&P while NASDAQ is lower by more than 2%. Volume is very heavy in declining issues, but SPX has not yet violated prior days’ lows nor the uptrend from this week near 3927.  Overall, as shown below, this week’s gains have been constructive after having broken out above this giant consolidation range from late June (shown by green arrow). Technology, Discretionary and Financials have led this rally, and Treasuries have also followed suit and yields have pulled back to near important support.  Heading into this month’s FOMC meeting, I’m expecting that Growth likely could backtrack over the next couple weeks coinciding with Treasury yields starting to stabilize and turn higher.  While it’s difficult to call for a move back to lows, I do feel it’s right technically to expect some backing and filling heading into FOMC, and SPX could weaken down to 3750.  Only if 7/14 lows of 3721 are broken would this advance be in jeopardy, and that’s not expected at this time.  Specifically, 3927, and 3721 are key levels on the downside, while 4012, then 4035-50 is important on any further gains next Monday.

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