Weekly ChartStorm - Arguably the market is looking for an excuse to rally
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2506(ESmain)$
1. Stocks bounced from key support levels late-last week.
2. Short-term sentiment is washed out = minds that can change.
3. Arguably the market is looking for an excuse to rally.
4. Yet there are a few key medium/longer-term risk flags still waving.
5. Inconvenient truth = the market has peaked at expensive valuations.
Overall, it looks like conditions are ripe for a short-term rally (maybe some follow-through on Friday’s bounce), but if I had to guess I’d say that the rally is likely capped and a range trade is probably the best case scenario.
The key issue is that none of the medium/longer-term risk signals have been negated, and if anything have seen confirmation (and will require a lot more time or space to change)... meanwhile Trump & team are basically telling us to expect a debt-detox, healthy corrections, and the possibility of recession (and you're bullish?? )
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