S&P 500 needs help from broader market participation

This week SPX closed at all time highs and it broke above it’s 3 months trading range. New all time highs is a characteristic we see in bull trends. Now the question is, can we see this move to be extended or rejected. In this post I would like to show you constructive signs based on DJTA, equally weighted SPX and XLF ETF.

The Dow theory teaches us that DJTA index should rally / lead the rally in a bull market. DJTA is strong and just started breaking above its corrective wedge, which rebounded exactly from 200d MA.djta

This price action is very constructive, and while S&P closed trading at 2415 this Friday and broke it’s trading range resistance, we would need to see S&P 500 equally weighted index to break above its trendline resistance as well.rsp

This hasn’t happened yet and if we don’t get it soon, would send some worrying signs to the SPX breakout, but I am expecting equally weighted index to resolve higher. Next index I am watching is Financial Sector ETF XLF. For S&P 500 to continue its rally we would like to see XLF break its trendline resistance higher not lower.xlf

We wouldn’t like to see XLF trade below support at 23.00 USD level. Should we start seeing this, we would have to reevaluate bullish thesis.

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