The S&P 500: The Definition of an Uptrend

Once again the stock market has pulled back, this time purportedly due to rising tensions in a broke-ass country that claims to be able to fire a bottle rocket at a US territory. This time, like most other times in the last 8 years, has turned out to be a non-event, and the market is rebounding. The narrative continues to change but the result continues to be the same. It just goes higher. Today we read about how the Volatility Index ($VIX) could quadruple before October with a major pullback.

As an observer of price, I find this all comical. When I look at the price action in the S&P 500 ETF ($SPY) there is only one narrative: an uptrend. Ever since breaking out of a sideways consolidation following the November election, the price has continued to trend higher and higher. The chart below tells the story.

Connecting the lows since November draws a rising trend line as support. This trendline is running above and parallel to the 200 day SMA as both move higher. There is nothing here to suggest that a top is forming. When you turn to the momentum indicators they remain bullish. The RSI has held in the bullish range and is now moving higher. In fact the current reversal sets up a Positive RSI Reversal (high low in price with lower low in RSI) with a target to 251.50. The MACD is also turning back higher after holding positive.

The equity market may correct 5% or 10% or more soon, but at this point it is not showing any signs that it will happen. Watch for a break of the rising trend line as your first sign that there may be trouble. Until then, onward and upward.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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