The stock market has run into considerable resistance at the top of the trading range, as it appears to be consolidating for a violent move either an upside breakout to new all-time highs, or a failure at the top of the range, leading to a swift retracement to the bottom of the range (4060). Since May 24th, $SPX has not closed above 4208 nor below 4192. That is an extremely narrow range, considering the volatility that has been displayed since February 2020.
Stocks continue to push higher, towards the all-time highs at 4238. The pace of the advance has slowed, but there has been some improvement in the internal indicators that paints a more bullish picture in that regard than we've seen in some time. However, if resistance at the old highs holds, then there is a distinct possibility of a retest of the lows of this trading range, at 4060. A move to new highs or a drop below 4060 should propel a stronger move in the same direction as the breakout.
The S&P 500 Index ($SPX) made a new all-time high on May 7th. Since then, a correction has been underway, and there have been several times in the last week when I'm sure that both the bulls and the bears thought they had taken control. There were two rather violent declines, both terminating near the 4060 level, so that is now the first support level. Both of those declines were followed by furious rallies back to the slightly declining 20-day Moving Average. A breakout from the current range should see follow-through in that same direction.
On Friday, May 7th, $SPX broke out to a new all-time high and so did the Dow ($DJX). However, after an early Monday morning rally, things reversed badly, and $SPX dropped sharply for the first three days this week, losing a whopping 173 $SPX points.
But there was no follow-through the next day, and in fact $SPX has rallied strongly, regaining the 4120 level and more.