Chart of the Day: Don't Break Out Your Rally Hat Just Yet!

As I illustrated for you over the weekend, 2600 on the S&P 500 stands to be a tough technical level to beat in the near-term.

Well, we're there (red line) this morning, and the bulls and the bears are giving it their all:



Emboldened by fresh stimulus from China (tax cuts announced last night) and optimism over the potential for a soft Brexit (T. May's destined for failure vote later today leading to potential delays/compromises), the bulls have hung in there better than I might've otherwise expected so far this morning.

Even the ill-timed publishing of a comment from the U.S.'s ill-equipped trade rep, while sparking a strong initial selloff, hasn't deterred the bulls (at least so far).

While the trading off of the December 24th low has indeed been bullish (late intraday buying, rallying amid bad news, strong breadth, etc.), I want our clients to understand (if not expect) that a testing of that Christmas Eve low remains a distinct possibility. Although, again, the action of late has been encouraging...

Should the bulls succeed 2600, 2630 (where the next resistance line meets the 50-day moving average [green line]) will be the next big test.



So why am I boring you with all of this technical stuff? So as to not have you breaking out your rally hats just yet. There's a ton more to be done before we can sound the all clear to new bull market heights.