It is nice to see some consolidation and digestion after the sustained move up from March 23rd and the recent decline last week. Conditions certainly were frothy last week, and some of the headlines surrounding Robinhood traders brought back memories of the day trading manias of the late 1990s. That being said, the pullback last week was constructive, although perhaps not enough (likely due to Fed liquidity blunting the pullback). Now, I see a bullish flag formation forming. Currently we sit around the 0.5 retracement level, and could see a bounce off of here. But more consolidation may continue and take us down to 0.618 before resuming upward trajectory towards resistance at 3200. Trend line as well as 50/200 MAs may provide some support if we slip through 0.618. Nevertheless, I currently still see pullbacks as buying opportunities with a bullish outlook for the next few weeks. I do have some concerns beyond that, as we get closer to the election. But I think there is a as good chance to retest the recent highs, and possibly even all time highs over the next few weeks.
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We touched the top of the flag today and retreated a bit from there, not unexpectedly. Will watch for a breakout in either direction as we continue to move towards the flag apex. My feeling is that eventually, the breakout is more likely to be to the upside of the flag, but we may remain within the flag boundaries for a little while longer. Watch for a breakout above the upper trend line.