US equities have extended their relief rally again tapping into an important resistance level at 4310. On the daily timeframe the market has also respected the 200MA (not a strong resistance) but will hold physiological significance. For the time being momentum indicators such as the MACD & Stochastic show no 'sell' signals therefore the bullish retracement will likely advance further. Long term biases remain bearish for major US equities therefore exercise caution with long positions as we are awaiting sell signals to begin another leg lower in line with this years trend.
Several of the US market internals are reaching overbought extremes which points towards a period of retirement or consolidation if nothing more.
The inversely correlated VIX index is poised for a MACD 'Buy signal' which could potentially be a precursor to this relief rally in indices taking a breather. We expect a bearish downturn in major equities in the coming weeks as it would appear very unlikely that the June low will remain as a single print low and not be swept.
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