Summary

If the stock market deteriorates (price, amplitude, momentum) too much more, we may need to take our medium-term bullish technical outlook forward. While the major averages remain near their all-time highs and have yet to show major deterioration or long-term technical damage, they have suffered short- and medium-term damage that warrants at least a yellow flag. As examples, the S&P 500 (SPX) is back below its 50-day moving average, the five-day/13-day EMA crossover remains a sell signal, the exchange rate of 21 days (ROC) is in negative territory, the SPX is below its average daily Bollinger Band, the last two rallies have failed, and the daily Vortex indicator remains in a sell signal. The SPX has charted two weekly and two monthly bearish momentum divergences. Weekly divergences date back to early 2024, while monthly divergences date back to 2018. The last time we saw anything close to this length of monthly divergences was from May 1996 to August 2000 Also, the weekly Coppock Curve has charted a bearish divergence for the first time since the late 2020/late 2021, and that certainly didn’t end well. The width is melting and