The last breath of the Bear Rally?

A new Primary wave 2 price top occurred yesterday in the S&P 500, but not in the DJIA and Russell 2000. 

The DJIA closed just shy of the high by 37 points while the Russell 2000 closed below the April 29 high by 27 points. 

The move in the broad market index doesn’t, however, change the characteristics of the change in trend measured across all three major market indices representing large, mid, and small-cap stocks.

S&P 500

DJIA

Russell 2000

After April 29, stocks fell for three straight days with an advance/decline ratio expanding to 10 to 1. 

Yesterday the CBOE put/call ratio pushed to 0.61 compared to 0.55 at the February 19 S&P peak. This could potentially be a sign of the last optimistic breath in the bear market rally.  

If the DJIA carries above the April 29 peak, potential stopping areas are 25,018-25,865 and 26,838-27,139. For the S&P, 3130-3238 is a potential next stopping area according to an alternative wave structure.

What to look for next?

A pick-up in volume combined with an increase in declining vs advancing issues across all three indices.

This will signal Primary wave 3 down has re-ignited.

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