Coolhand's Market Analysis

Since testing and bouncing off an important line of support the previous week, the S&P 500 is fast approaching a declining line of resistance.



We can see that price pulled back a bit on Friday, just shy of testing that line of resistance. Since peaking at the beginning of March, price has stair-stepped lower as we enter April. Overall though, price is not all that far from its peak and the longer term remains bullish as price remains above the cloud and the 50 dma is still rising (as is the 200 dma).



Looking at the banking sector, price has been in decline since early March, but bounced off a longer-term area of support twice over the past 2 weeks. Now, price is having a bit of trouble testing both its 50 dma and a declining line of resistance. The 50 dma is now flat. Given the central bank has been pushing rate hikes down the road, it seems odd that the banking sector should be experiencing much weakness at this point, but it certainly hasn't fallen apart either, but the chart is now neutral and could trend in either direction. This is an important chart given that banks have historically been a major pillar supporting the underlying health of the economy. Having said that, the major banks have had little interest in many years in serving anyone other than themselves. Nuff' said.

Sentiment wise, the National Association of Active Investment Managers (NAAIM) have been showing an increased wariness of this market recently. They are still largely bullish, but have backed off that bullishness some over the past couple of weeks. This is smart money, so I take notice of these shifts, though this recent shift does not necessarily mean an impending bearish event, it's just something to be aware of. Other sentiment surveys are on the neutral side, which is where they have largely been for some time now. Monday looks bullish with the OEX P/C leaning bullish and it's the first trading day of the month, which tends to be positive.

Two of my biggest indicators, cumulative breadth and liquidity, are in bullish configurations right now. And we are heading toward the tax deadline of April 15th, which tends to be supportive for the stock market. I am anticipating that the market will remain resilient, though there is no clear path for either bulls or bears in the current trading environment.