Even though the SPX closed 3 points lower than the previous week, it was the first time since the correction started at 1370 that the SPX and other equity indices did not make weekly lows, and this could be significant. Even the XLF, the weakest of them all, held its ground! However, it will take another week or two to determine if SPX can hold above a low of 1258 and start reversing its downtrend.
As we will see, the odds that it will are fairly decent. The stock market has a history of correcting into late June or early July. In the past two weeks, a nest of cycles – including Martin Armstrong’s 8.6-yr economic cycle — made lows, and the next cycle which could affect the market is not due until the middle of July. This should give the market an opportunity to start an uptrend so that it doesn’t get shoved down to a new low by the bottoming 9-mo cycle.
Our “White Knight” (the SentimenTrader) is still giving strongly positive readings. Inaddition,two other indicators that were giving us concern, the Summation Index and the “Black Knight” (NDX:SPX), appear to have bottomed and have started to turn up. Also, the SPX and QQQ may both have started a pattern of higher highs and higher lows. If they prevail and starts to gain some upside momentum, it would be a strong signal that a reversal is taking place.