The S&P 500 emini contract is pressing towards yet another probe of key support along the 1100 level, which also doubles as the rising 200-day moving average at 1099.70. As long as that support area contains any forthcoming weakness, with an overshoot into the June 8 up-trendline at 1095, my pattern work will consider all the action since the June 15 high at 1111.50 to be a sideways rest-digestion period ahead of another upleg.

If my work proves accurate, then we will look back on the past two sessions as a rest period (rather than a serious pullback) that worked off the overbought near-term conditions ahead of another powerful upleg. For that reason we are long the Ultra S&P500 ProShares (SSO) in our model portfolio.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.