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Stock Market Rising Wedge Continues To Develop As Expected

|Includes: DIA, QQQ, SPDR S&P 500 Trust ETF (SPY)

The S&P 500 index closed slightly higher today, moving up to a marginal new high for the uptrend from June above resistance at the upper boundary of the downtrend from April. Although the break above downtrend resistance reconfirms the uptrend, the key development remains the formation of the rising wedge from early June.

 

 

With respect to cycle analysis, the current cycle continues to be characterized by violent moves in both directions, just like its predecessor.

 

 

From an intermediate-term perspective, the move higher this week indicates that the initial rally phase of the cycle from early June remains in progress.

 

 

As always, it is important to keep the big picture perspective in view. At a current duration of 40 months, the cyclical bull market from 2009 is overdue for termination and it remains likely that the April high was a cyclical top.

 

 

Therefore, all short-term considerations aside, the risk/reward ratio of the stock market remains extremely poor from both long-term and intermediate-term perspectives. The myopic mainstream view has become focused on the daily news flow for the next indication of direction, driving the violent swings in what remains a trader's market. The next meaningful development will likely occur when the rising wedge formation terminates, so it will be important to monitor market behavior closely during the next few weeks.

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.