Current status

I have to admit that I have largely underestimated the strength of this bounce from its low around 3700 for S&P. I thought the bounce would stop around 3900ish and S&P would start to head back. Totally wrong of course! Yesterday S&P broke out to all-time highs around 3960 intraday but closed below its previous daily high. But today, it managed to close a few points higher, making a new all time high on the closing basis. Truly amazing! I have already heard talking heads euphorically claiming that the tiny correction is over and we are on the way to resume the next leg up. Really?

I don't have a fixed viewpoint for the near term (in terms of weeks) although I have been biased to the downside for sometime. Should I change my standpoint now when all the indexes have broken out with new highs today? I will if I see a clear TA picture. So let's see the current S&P chart as shown below. Indeed it is at a critically important inflection point where it can go either way. If it can decisively go above the tipping point of the triangle and stay above firmly, then the chance is high that this correction is over and we will see the green sky in the weeks ahead. On the contrary, if it turns back from here, it may very well retest its recent low around 3700 or even 3500ish for a more severe plunge. Then if you look at its momentum indicators, IRS and MACD, both are still clearly in a downtrend even though S&P is trending up, a big negative divergence! This is quite bearish, suggesting the current uptrend is fragile and may not be so sustainable. Don't forget, before the March epic crash in 2020, S&P was also making numerous new highs but with consistent negative divergence on its momentums. Until this is cleared up, new highs may not be so bullish! 

Taking all together, I'm still more bearish than bullish and I still doubt we have been out of the woods already as of now. But next week will be critically important for the market's direction. Sure I will be very cautious about shorting the market at this moment until the TA picture becomes more clear. Regardless, I continue doing a lot of swing trading these days. For the passing week, I have traded both longs and shorts a few times actually. So far as good😇✌