S&P Update – Bulls Supporting the Recovery

Yesterday’s market session began with notable selling pressure but managed to close with a robust recovery on high volume. The technical indicators appear aligned with this recovery, and the upcoming earnings reports from megacap companies could potentially serve as strong catalysts for continued upward movement.

Market Recovery Analysis

During our recent Wyckoff Market Discussion, we analyzed this current market situation in depth. What’s particularly encouraging about today’s action is that the market attempted to decline and actually went down on news. If there had been significant supply present, the outcome would likely have been different.

Key Observation: Last week, we discussed the possibility of this market upthrusting – pushing one or two point figure boxes above the previous range-bound condition before potentially failing back into the established structure. Following this analysis, the market did indeed retreat in the morning session, suggesting what appears to be more of a shakeout than a true reversal.

Technical Evidence

A critical test occurred when prices dipped below the recent highs. What we’re seeing can be described as an automatic rally following that historically significant bar from a few weeks ago. The subsequent decline to just below 5180 created a higher low test – an important technical development.

If this were truly a range-bound condition requiring more consolidation work, perhaps within a larger accumulation structure, today’s action would have likely resulted in prices falling below the key resistance level and remaining there. Given that we were down 600-700 points on the Dow during the morning session, continued weakness would have been expected.

Bullish Case Strengthens

However, that’s not what happened. Instead, prices recovered and climbed back above resistance. The volume was substantial, which strengthens the bullish case for the market’s ability to continue higher from this point.

This price action, analyzed through Wyckoff principles, suggests the bulls remain in control despite the morning’s volatility. The market’s ability to shake off negative news and recover lost ground within a single session demonstrates underlying strength.

Looking Forward

As we continue to monitor this development in our Wyckoff Market Discussion sessions, we’ll be paying close attention to whether this recovery can sustain itself and push to new highs, or if further consolidation will be necessary before the next significant move. The upcoming earnings reports from market leaders could provide the catalyst needed for a decisive move in either direction.

For now, the technical evidence suggests the bulls are successfully supporting this recovery, and the path of least resistance appears to be upward following today’s impressive reversal from morning weakness.

This analysis is based on content from our Wyckoff Market Discussion and is intended for educational purposes only.

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