Impressive breadth reading, but price requires a bit more strength

Note: I’ll be on CNBC Thursday morning at 8 am. EST discussing technical market thoughts.

SPX’s technical trend and momentum have remained negative since early December 2024, but the post-CPI bounce in Equities has brought the price to near-important resistance, which will provide some clues/confirmation of a bearish trend over the next 3-4 days as to whether this bounce is sustainable. While the better-than-expected core CPI reading caused yields to plunge, there will need to be more evidence of Treasury strength to have confidence in a larger rally. The worries at this point solely revolve around the lack of bullish confirmation in price and momentum coupled with the very low level of market breadth. Overall, I like being in the market for a rally into mid-February. However, given a number of unconfirmed technical factors, one still can’t rule out some backing and filling in next week, which would provide an even better risk/reward opportunity for investors.

Yesterday I discussed that despite the 10 key reasons why SPX was getting ready to rally, it was difficult having conviction that a low was in place.  I still feel this is the case, but am encouraged about the breadth in Wednesday’s session along with the drop in Treasury yields.  

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