The first set of charts include an SPX six-month daily chart that shows a W-pattern and a somewhat bullish inverse head & shoulders with the neckline at 1,290. SPX has generally held 1,290, along with the 10-day MA, over the past seven trading days, in the belief a new high (above 1,326) will be reached.

The four charts below SPX are same period charts of the Transport Index, Utility Index, Dow Industrials, and Nasdaq. The Transport Index failed to join the SPX rally after completing the double-top in early-July, while the Utility Index made new highs. The arrows in the Dow Industrials chart show almost a perfect W-pattern, and a break above 11,250 resistance, which has held recently. Nasdaq continues to underperform.

There are many mixed signals in the first set of charts, including a bullish MACD, and bearish volume. Moreover, the SPX 200-day MA continued to rise over the steep fall and volatility, which is bullish. Furthermore, the bond market rally (not shown) has sent the 10-year bond yield 45 basis points below the Fed Funds Rate, which is bearish (i.e. inverted yield curve). Some short-term technical indicators (not shown) suggest SPX 1,290 will not hold and a pullback, e.g. to 1,275, will take place next week. After a pullback, SPX may rally again.

The second set of charts show intermediate-term technical indicators remain bullish. However, a trend reversal may take place within three weeks. NYSI has made lower highs, while SPX has made higher highs over the cyclical bull market. However, NYSI is nearing the (gray) downtrend line. Also, below the NYSI and SPX comparison chart are the NYMO 50 and 20 day MAs, which are nearing tops. However, the CPC 50-day MA remains bullish (i.e. falling from an all-time high).

It's uncertain if SPX will rise to a new high over the next few weeks. Nonetheless, a trend reversal may take place in early or mid September, after the Labor Day holiday a week from Monday (September 4th), perhaps around the 9/11 anniversary. Before the 1987 crash, the Dow Industrials also created a W-pattern; click link http://www.lope.ca/markets/1987crash/ Currently, SPX is in the second longest period in history without at least a 9% pullback. Also, there's a great deal of uncertainty about the economy. So, there could be some big moves, both up and down, over the next two months.

Free charts available at http://www.peaktrader.com Forum Index Market Forecast category.