The S&P is back at its 50-day MA and has room to maneuver to declining resistance defined by May and June swing highs. Buying volume has dropped after 2 days of gains, so bulls are not yet convinced by the last two days of action, but remember, rallies climb a wall of worry.
The Nasdaq gapped above 5038, creating what could turn into a bullish island reversal (but if true, this morning's gap can't close). Technicals are mixed, with bearish technicals but a 'buy' trigger in On-Balance-Volume. The Nasdaq is enjoying a relative gain against the S&P.
The Russell 2000 continued its rally in no-mans land. It won't get to challenge the 'bull trap' until it reaches 1,278. However, Small Caps are underperforming against the Nasdaq, so it may struggle from here.
With Greek news out, the worst of the action could be behind the indices. However, a larger consolidation should be welcomed, and a rally from here would simply kick this can further down the road.
You've now read my opinion, next read Douglas' and Jani's.
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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com, and Product Development Manager for ActivateClients.com. I do a weekly broadcast on Friday's at 13:30 GMT for Tradercast, covering indices, FX and gold, silver and oil - all are welcome! You can read what others are saying about Zignals on Investimonials.com.
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