The market pulled back most of last week, but ended with a modest gain. It has been trading in a range the last couple weeks deciding what it wants to do. Normally, I would assume it is just a consolidation before a move higher, but I am cautious. This is a seasonally weak time of year and there are a few bearish divergences to pay attention to.
Here is the daily chart. The key number to watch will be 7600. If it can stay above it over the next few days, we are likely going higher. 7600 has served as resistance for most of June and July. It is now a key support point for the market to stay above.
What concerns me the most is the bearish divergence that continues in the rolling 52-week NHNL. If it cannot reverse that number soon, the market will fall. It reminds me of the last bear market. The rolling 52-week NHNL could not stay in positive territory, but we continued to make new highs. That lasted for a couple months and then the market started to drop with enthusiasm.
The net capitalized NHNL is also showing a bearish divergence, while the normal NHNL is slightly bullish, but mostly neutral.
Cryptocurrency came alive this week. It is being attributed to the US Dept of the Treasury increasing its bond buybacks to keep interest rates lower. This is probably the correct reason. There were other reason listed, but they are not as likely. It triggered a buy order I had. We will see how it goes. I have had some luck with crypto in the past. Decent trading week. I am going to start testing a short squeeze strategy. My sense is that it will work. It will be a lot of boredom followed by some excitement. Rinse and repeat. We will see if it works! This one will probably take me months to test before I am ready to put in some real money as they don’t happen as often.
