As the chart below shows, the S&P 500 continues to consolidate just below resistance following its strong rally through late July into the first few days of August. Is this a warning that the index is losing its upside momentum, or is it simply regrouping ahead of another push higher? It’s difficult to know. But it’s also fair to say that dips continue to be bought and that the market has a habit of responding positively to economic data and geopolitical events, even if the news isn’t particularly good.
Source: TN Trader
On the other hand, the rally is quite long in the tooth and many of the corporations leading the advance are priced to perfection. Nevertheless, there’s no law that says equities can’t continue to rally from elevated levels.
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