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The market was a rather curious beast today, as the Russell 2000 reached its highest level in human history during the session. I well remember at the opening bell, some of the more persistently bullish Slopers were scurrying around, high-fiving each other about how this would be a “gap and go” day and how great it was they could simply buy the dip.
The market didn’t gap and go. It came and went.
To my eyes, the market remains utterly vulnerable to a sub-2000 drop on the ES, which would provide a marvelous scenario in which the mindless dip-buyers get butt-hurt on a pro tempore basis.
Friday’s price action has allowed DIA and SPY to breakout out of the overhead resistance it was facing the last two weeks. With this breakout, the two indicies have clear shots at their all-time highs. SPY is pretty much within this resistance area any further upside and those highs are tested. DIA has a little more room but there is little resistance till those highs. As long as SPY stays above 208.18 and DIA stays above 179.75, the bulls hold the edge.
One week ago we have outlined two possible scenarios, after the positive WEEKLY Close:
1) start of a new WEEKLY leg up
2) small bounce before another WEEKLY leg down
Looking at last week’s Close, it seems scenario 1) came true. The ESM15 WEEKLY chart below shows it quite clearly: a big green candle rocketing up >50 points from the latest lows/support area in the ~2040s.