Last week, the market reached overbought levels and was due for a pullback. Below is the same chart that I presented in that update.
The index fell decisively below its trendline then advanced back to that trendline. This pattern is common and typically resolves to the downside.Bullish Scenario – If we are going to get an end-of-year market rally, the market needs to advance strongly above resistance. In the chart below, is the S&P 500 in the upper panel. Below the index, we have the following charts.This breadth indicator charts the number of stocks hitting new 52-week highs minus those reaching new 52-week lows on a cumulative basis.These charts compare the performance of Consumer Discretionary, Small Cap, and Semiconductor stocks, all considered risk-on indexes to Consumer Staples a risk-off sector.