The S&P 500 index closed slightly higher again today, moving up to another marginal new high for the uptrend from early October. Technical indicators remain moderately bullish overall on the daily chart, favoring a continuation of the advance. However, the rally from mid-December is extremely overextended on a short-term basis and it will almost certainly be followed by a violent overbought correction.
The uptrend has begun testing long-term congestion resistance near previous highs of the cyclical uptrend from early 2009. A weekly close well above the bull market high near 1,365 would confirm a breakout and forecast additional intermediate-term gains in early 2012.
With respect to intermediate-term cycle analysis, the second Half Cycle High (NYSE:HCH) of the cycle from early October is overdue, so it is unlikely that the S&P 500 index will be able to break out to sustainable new long-term highs until the initial rally phase of the next cycle.
The forthcoming correction will provide the next assessment of cyclical bull market health and we will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.