Rally May Have 2-4 Weeks To Go

Editor’s note: Our monthly Insights has been written, The editing and chart insertion still needs to be done, but the assumption is that we will begin releasing it tomorrow night,

On Tuesday, the S&P 500 rallied by only 0.2%, but that was enough to establish the index’s fourth consecutive gain. Breadth was modestly positive, but the daily a-d lines for both the S&P and NYSE commons stocks has moved to new rally highs along with the indexes. Volume declined from Monday’s level and is still below its 21-dma, but 108 of the stocks in the S&P 500 were able to rally on higher volume.

S&P 500 with Bullish Percentage Indicator


Given the modest activity, there are no changes to our outlook. Both near and intermediate momentum oscillators have a bullish bias and the classic uptrend (higher highs and higher lows) is still intact, Thus, the rally likely still has more life left in it.

That said, the rally is in its 13th week and will likely soon be showing signs of fatigue. For example, the bullish percent indicator is above 70% for the S&P, the DJIA and the NASDAQ for the first time since January. Moreover, near term momentum is positioned to peak within the next 8-9 days, while (more importantly) the intermediate oscillator is positioned to peak by the end of this month. Thus, there is evidence that this rally may only have 2-4 weeks left in it. A subsequent correction is likely to last for 3-5 months.

Daily and Weekly Coppock Curves (With Projected Paths)


Nearby resistance levels pale in comparison to the importance of Monday’s breach of 944; that said, next important resistance is likely at 982.

First support is at 881.