Neither Europeans Nor Americans Want to Bid the June SP500 Above 1296 Yet This Week

There is now a double top that has formed at 1296 on the week. At 9 am Monday, on a bearish existing home sales report that the market all but ignored, the SP500 halted its advance at 1296, 22 points above Friday’s 1274 close.

Double tops with rising bottoms are generally expected to be taken out, and provide bull trend continuations. But consider the following Not So Bullish Key Observations:

1. US investor confidence hesitated after the bearish 9 am existing home sales on Monday. If existing home sales sucked, how bad might new home sales suck on Wed morn?
2. The news flow overnight out of Asia and Europe was not sufficient to encourage European investors to bid the SP500 above Monday’s 9 am high. They sold the 9 am high at 330 am.
3. The green moving average on the 45 minute chart has defined the bullish momentum from the news flow on Friday, Sunday and Monday. It is now intersecting 1291. A failure of 1291 now would indicate momentum is waning and a corrective trade is about to get underway.
4. There isn’t any news flow out of the US today that will further ignite the animal spirits of US investors today. And they just might want to start discounting tomorrows new home sales at some point today.
5. The 50x4 point and figure chart not shown here indicates a contraction in volatility has occurred since trading 1296 yesterday. The upper volatility band is sloping into 1296 and the lower volatility band at 1291. Whichever volatility band price chooses to breach, volatility can be expected to expand on the upside if the upper band is breached and volatility should expand on the downside if 1291 is broken.
6. If the volatility band and double top at 1296 is breached, be aware that any rally that lack conviction will likely indicate false auctions and possible outside down day. False auctions should not surprise after such a strong move to the upside. However, a sustained trade above 1296 can grind the mkt up to 1304 where it will encounter resistance from a bearishly sloped 21 day average on the daily chart and median lines on the pitchforks on the point and figure charts not shown.