Strong 6-day Moves

Altogether, the SPX now is +4.8% over the last six days, which is the best six-day run since gaining +6% from 10/30 – 11/6.  Yes, that was the start of the uptrend. 

Let’s not forget, though, that back then it seemed unlikely that the short-term pop could continue much longer:  the SPX had rallied right into two key forms of resistance – the 50-day moving average and the key downtrend line that stemmed from the July’23 high.  Knowing how each rally attempt over the prior few months had been squashed, it wasn’t the best set-up.

A few days later, the index gapped above both resistance lines after an encouraging CPI report, which kick-started the multi-month extension.

Currently, the index is staring up at the same two lines once more – the 50-day moving average and a downtrend line drawn from the July 2024 highs.  And the same doubts about its continued prowess are in the air.

Obviously, there are various differences between now and then. The most obvious one is that the recent near-10% drop happened in about three weeks, which was A LOT quicker than the 11% correction over three months last year. 

From an economics standpoint, last fall, the market was looking for clues to confirm the rate-hike cycle was complete. Now, it’s looking for solid reasons to expect the rate-cut cycle to finally commence…