$SPX BREAKS THROUGH TO A 50 YEAR RECORD -- $SPX SITS NEAR 3 YEAR TREND LINES -- $NYA HOLDS ABOVE THE 2007 HIGHS -- $SPX ROLLS OVER AFTER TOUCHING TREND LINE -- RUSSELL 2000 STALLS AT LEFT SHOULDER

$SPX BREAKS THROUGH TO A 50 YEAR RECORD... The S&P 500 ($SPX) recorded its 81st week since touching the 200 DMA back in 2012. This is the longest streak surpassing both the 1986 and the 1965 streak of 80 weeks. Pretty amazing. This chart shows some of the longest runs in the past 30 years. I had previously marked 1984 as a long run. This was an error with the period only being 62 weeks. The run between 1962 to 1965 had a huge stab down to the 200 DMA in 1963 which started the 80 week run to the 1965 touch of June, 1965. It would appear to me to use the 1962 start instead rather than a one day plunge and intra day reversal. With that footnote, we have now gone on the longest rally in 50 years.

Chart 1

$SPX SITS NEAR 3 YEAR AND 5 YEAR TREND LINES... The S&P500 ($SPX) tested the blue, 30-month trend line this week as well as the 4 year trend line off the 2010 highs shown in red. The blue trend line has controlled the highs closely for 14 months going back to April 2013. We touched it again this week as shown in Chart 2.

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Chart 2

This is the first time the $SPX price action has touched either of the two trend lines since they crossed as shown on Chart 3. You can see that on the zoomed in view of the last 18 months of the chart shown above.The two trend lines became obvious at least a year ago but the convergence/crossover took place in April 2014. The red has crossed below the blue trend line now. Is that meaningful? Only that the trend line with a lower slope is the first level of resistance.

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Chart 3

$NYA HOLDS ABOVE THE 2007 HIGHS ... The New York Composite ($NYA) on Chart 4 spent the entire month of May 2014 above the previous highs of 2007. Looking at the chart, the Wilshire 5000 ($WLSH) broke out to new all time highs in January of 2013. The outperformance of the Nasdaq Composite ($COMPQ) seems solely responsible for the gains in the Wilshire relative to the old highs but both markets (The Nasdaq and the NYSE) have run a long way since 2012. The Nasdaq and the Wilshire had more of an uptrend through the 2011 and 2012 period. This is currently a bullish breakout on the $NYA.

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Chart 4

Looking back in history on Chart 5, the Wilshire 5000 ($WLSH) broke out above the year 2000 highs in May of 2007 and oscillated around that level for 9 months. After trying repetitively to break away, the Wilshire 5000 rolled over in January 2008. It was formidable resistance even though the exact level never held. The Nasdaq has been oscillating sideways for the last 6 months at the same level as the resistance from the Y2K right shoulder or Year 2000 topping pattern. Time will tell if these long resistance levels for the $NYA still matter, but the resistance levels were significant in 2007 relative to 2000 for the Wilshire 5000 ($WLSH). Currently the 2000 level of the $NASDAQ seems important as well. We'll see if the current breakout on the $NYA retests the support of the 2007 highs. These three indexes are the broadest indexes I use for the US markets.

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Chart 5

$SPX ROLLS OVER AFTER TOUCHING TREND LINE... The $SPX rolled over on Chart 6 today after making new highs on Monday. First support would be at 1900 and we would watch for support to hold at 1885 if 1900 did not hold. 1885 was the major resistance level in March April and May. The short trend line of 6 months is showing the slope of the trend as a little less than either the blue or the red trend lines from Charts 2 or 3. This is normal to have smaller trends within the primary trend. Today the market closed at the trend line.

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Chart 6

RUSSELL 2000 STALLS AT LEFT SHOULDER... The Russell 2000 ($RUT) stalled at the same height as the left shoulder on Monday. This is a sensitive area as this makes a textbook level for a head/shoulders top to appear as shown on Chart 7. The daily chart shows the resumption of the up trend and the stall at the previous high. We can also see this is a test of the underside of the channel which is commonly referred to as a backtest of the channel. It is not a surprise that this would find resistance on the first test of this level for short term traders.

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Chart 7

The weekly chart of the $RUT with the MACD indicator shows how the momentum has lagged on this move. We continue to watch if the price action can take out the negative divergences on the indicators. This weekly analysis defines how slow motion, long period, tops are put in place and why we monitor the price developments at these levels so closely. Should this pop through to the upside and erase these divergences, the chart moves to bullish. Until these levels are taken out, traders should be prepared for some volatility as well as developing a strategy for the completion of a market top. Plan A is for higher highs. Plan B is for lower highs if a major topping pattern completes.

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Chart 8

THE GOLD MINERS VS. GOLD RATIO FIRES OFF A BIG BUY SIGNAL... The bullish news of the day has to be the breakout in Gold Miner stocks this week. They have really surged. This breakout is a little early based on the January and July cycles over the last few years, but it clearly looks to be jumping here. The ratio of the Gold Miner ETF (GDX) to the price of the gold tracking ETF (GLD) can be a big clue to the breakout.
Today we can see the GLD breakout clearly and the signal given by the ratio, confirming the breakout.

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Chart 9

Congratulations to the $SPX for the historic run between the 200 DMA's. That is a huge run for all the companies involved.
Enjoy the World Cup, The US Open and Fathers Day this weekend.
Good trading,
Greg Schnell, CMT