LIVE MARKETS-S&P 500 traders tense given trendline, potential July turn

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S&P 500 TRADERS TENSE GIVEN TRENDLINE, POTENTIAL JULY TURN

With the S&P 500 index .SPX near record highs, traders remain on guard given key resistance, and a Fibonacci time projection coming up later this month.

Last Thursday, July 3, the benchmark index hit a record intraday high of 6,284.65 before posting its record closing high of 6,279.35 on that same day.

After a quick dip of more than 1%, the SPX has crept back up, ending at 6,263.26 on Wednesday.

Meanwhile, the index has been flirting with a long-term resistance line from its 1929 high, which resides roughly around 6,280 on a monthly basis:

This line presents a major hurdle given that it capped strength in the December-February period.

Additionally, traders who utilize time-based methodologies are also on alert.

Since the market's October 2022 trough, and using trend-based Fibonacci time projections, the S&P 500 index has seen some spooky turns around the weeks that suggested the potential for a reversal of its most recent trend.

The 2022 bear market occurred over a 40 weekly-bar decline. The week beginning Monday, July 21, will mark the 3.618x time projection, or 145 bars forward from the week of the market's bottom in October 2022.

Also of note, on Wednesday, the market volatility index .VIX posted its lowest close since February 20, which was just one trading day (td) after an S&P 500 peak, which preceded a 19% collapse on a closing basis.

There's no way of knowing just how severe a deeper pullback, if one were to now develop, would be. That said, tension is building as traders look to see how the SPX handles the resistance line, and whether the echo from the end of the last bear market still resonates. This, amid what may be complacency ahead of what tends to be the more dicey months of late-summer, early-fall.

In the event some air comes out of the tires, the rising 20-day moving average (DMA) ended Wednesday at 6,110, while the rising 50-DMA finished at 5,934. Over the next week or so, these two moving averages will be around 2.0%-4.5% below the record intraday high.

On a continued trend higher, the upper monthly Bollinger Band now resides around 6,450 (2.6% above the record intraday high).

(Terence Gabriel)

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