Market Update for Thursday, May 25th, 2023

Good afternoon, traders.

We’ve had this long and exhausting sideways motion on the S&P 500, conducted mostly under the 89-week SMA:


A horizontal structure such as this is compatible with a pattern of distribution, and they can poke out the top in a stop-clearing raid, and we have that. If it is a distribution, and if the distribution is complete, we would like to see a move out the bottom.

Ideally, what we want to see internal to the waves, is an impulse wave down off a high. We had an impulsive decline off the May 1st high, but then went on to make yet another new high. That may have been our “spring.” We have another impulsive decline now, followed by a retracement. So let’s take a closer look at that now.

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I also really like the VIX here. It’s consolidating in a bullish wedge at its upper Bollinger Band:


So if this wants to giddyup and go it may. They can certainly crush this, too. But if we’re going to have a drop, it’s nice to see something like this.

So we’ll see what we get here. There’s a decent setup.

I hope everyone has a fine evening.

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