Globex traders didn’t accomplish much in either direction overnight. We will open inside the top of Friday’s range with Globex inventory balanced. We are close to all-time highs, so use the ATH on Friday at 4551.50 as your gateway to higher prices. I would stay bullish, even above the overnight halfback at 4524.75, which is close to Friday’s POC. Below that level, I would be looking for an overdue pullback.
The market has behaved bullishly over the past week. A double-top with September highs remains possible here, and it would bring the trading range I have been expecting. Interest rate spikes in connection with the completion of the head and shoulders reversal pattern on the 10-year will be headwinds for the market and the leading FAANGMAN group, many of whom are reporting this week. This week promises to be volatile with the earnings reports alone, and then we have the Fed meeting as icing on the cake next week.
Putting the negatives aside, however, the stock market is heading into seasonal strength, and this market has been very good at defying the laws of gravity. It is likely best to follow the quartet strategy this morning. Let the market tell you what it wants to do, don’t try to anticipate it.
A.F. Thornton