Summer Rally?

I remain bullish. The market has worked off the overbought readings on the 50 day percent indicator and while we could see a 2-5 day pullback in the thin pre-holiday trading, the market looks poised to move higher.

Percent Above the 200 day and 50 day Averages
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Reaching Oversold Levels

We are again reaching oversold levels on the McClellan Oscillator. With the SPX testing the 50 and 200 day moving averages it is likely that we should find a low in here sometime in the next few days. It is possible that the initial bounce may be a "B" wave and not establish the final bottom. Barring a complete implosion with the 10% index going below -500, the trend still remains up

The McClellan Oscillator for June 22
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First week of June

Some standard technical indicators with added emphasis on the period when the SPX was below the 5 year Bollinger Band. I view this period as highly significant and as extremely rare (by definition). As a result most indicators have also been out-of-limit causing most market watchers to draw incorrect conclusions. We are just now seeing the market trade inside the Bollinger Bands and the indicators are skewed because it took so long for this to occur. I would continue to watch out for short term oversold indications but remembering this:

Where we are in the market cycle should be viewed as only ONE monthly bar off the bottom (May) all pullbacks should be treated as buying opportunities.

The short term cycles, including the fibonacci counts, point to the period of June 21, give or take a few days. Around that time I would expect the direction of the market to reverse strongly. If it's declining into the June 21st period, it should be a low.

SPX Weekly & Bullish Percent Indicator
Pinkish bars are the weekly ranges.
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SPX Daily and the ARMs Index.
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May Wrapup

The MCO has been in a zig-zag correction in negative territory for the last few weeks and turned positive on Friday.

The MONTHLY SPX had its first close above the 5 year lower Bollinger Band in 7 months. The market gains for the months of March and April are being misread by many other players and being seen a bear market rally which they suggest is now over because of the large percentage gains. In my opinion, the price action moving the SPX back to the lower Bollinger Band was just correcting a panic overshoot on the downside. This moved prices up to the undervalued zone at the lower BB which has been a good buying point in the past. The month of May saw continuation of the rally along with a corrective sideways pause which should now be resolved to the upside.

On the daily chart I've marked the 928 zone, which is the location of the declining 200 day moving average and the upper 20 day Bollinger band, as a point of resistance --- This seems like a logical point for the index to pause but given the recent pauuse in the MCO, along with the sideways correction over the last two weeks, I believe the SPX is poised to punch through the 200 day average, turning up the Bollinger bands, and then punch through SPX 1000 before we see a more substantial 10% to 12% correction

The MCO at the end of May
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The Monthly SPX at the end of May
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The Daily SPX at the end of May
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Some Perspective

The chart says it all, it's either the end of the world as we know it, or not. Place your bets.
The SPX and the McClellan Summation Index since 1969
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