Calm Before Next Climb (by Mike Paulenoff)

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(Note from Tim: I'll be traveling the rest of the day, so I'm going to go quiet at this point. I might manage to get another post or two up with my iPhone later tonight).

The S&P 500 emini contract is pressing towards yet another probe of key support along the 1100 level, which also doubles as the rising 200-day moving average at 1099.70. As long as that support area contains any forthcoming weakness, with an overshoot into the June 8 up-trendline at 1095, my pattern work will consider all the action since the June 15 high at 1111.50 to be a sideways rest-digestion period ahead of another upleg.

If my work proves accurate, then we will look back on the past two sessions as a rest period (rather than a serious pullback) that worked off the overbought near-term conditions ahead of another powerful upleg. For that reason we are long the Ultra S&P500 ProShares (NYSE: SSO) in our model portfolio.

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