Happy Tuesday - below is an excerpt from this morning’s Opening Look. We also discussed four new trade ideas, among other topics.
Friday and last week’s performance in a nutshell:
🔴 4th straight decline
🔴 4th straight negative breadth day
🔴 Biggest weekly decline since the week ending 4/4/25
🟢 No downside follow-through after Wed’s 1% decline
🟢 Held the confluence of support near 200-DMA
🟢 Retraced less than 1/2 of last week’s 5.3% gain
🟢 Intra-day buy interest after pre-market tariff news
🟢 Bullish patterns remain intact
The only true blemish last week was Wednesday’s 1.6% decline, but with minimal downside follow through after that, the damage was contained.
So, was it a failure to go up with bulls not seeing any bounce, or was it a failure to go down with the market holding steady after the long streak of no 1% declines finally ending?
For now, the onus is on the sellers to capitalize on down days, which hasn’t happened yet.
GoNoGo Trend Charts
I’d like to introduce a new indicator that I’ve been using and will cite going forward in our daily S&P 500 analysis (and wherever else it’s appropriate): GoNoGo Trend, which you can read all about here.
As the catchy title suggests, the indicator aims to catch inflection points using a blend of many different technical factors. In using the system personally for the last few months, I’ve found it to be a very helpful complement to my own analysis. Here’s a brief description of what the following charts show.
“GoNoGo Trend is easy to interpret.
1-It paints the price bars bright blue when its unique mix of inputs signal the strongest bullish environment.
2-When slightly less bullish, the color turns to aqua. This can happen at the start of a new trend, or after bright blue bars, indicating that the trend may be weakening.
3-The amber bars represent uncertainty, often appearing in the transition from bull trend to bear trend and vice versa.
4-The lower intensity bearish color is pink…
5-And the darker purple appears when the bearish trend intensifies.”
This daily SPX chart shows how the index’s trend shifted to bearish a few days after the February top. It’s been in a bullish trend since the SPX broke above 5,500.
But what’s most interesting is that the current pullback looks similar to the September’24 pullback and subsequent higher low. In fact, this time, the market appears stronger from this perspective. The trend remains bullish, while in early September, it temporarily shifted to Neutral.
Here’s the weekly GoNoGo Trend chart, showing how the longer-term trend could flip from neutral to bullish soon, too. This last happened in March’23, which was just before bullish chart patterns started to work again, leading to two more years of uptrending action, of course.
Key Higher Lows
Here’s another perspective, which shows the two prior key higher lows in September’24 and May’24, both of which we’ve referenced in the past. Indeed, this pattern is MUCH bigger for obvious reasons, but the general structure is the same, which is what we care about most.
