We continue to watch the 12-month moving average as a nice long term trend-following guide. This long-term indicator will keep you on the right side of the market most of the time. As of today, the line in the sand remains around the 2040 level. We try not to get too complicated here. When above the line we are in a bull phase and when below the line, a bear phase.
The S&P is testing the long-term up trendline from the 2009 bottom. This giant rising wedge is getting squeezed and will be watched to see which direction price takes us. A significant break below this trendline will be viewed as bearish considering the nature of this uptrend.
We are currently operating in a trading range and recently experienced a false breakout to the upside. As of today, the S&P has broken the up trendline from the February bottom. It remains a trendless, choppy range and the areas of support to watch will be the May lows (2067), which was close to being tested today during the morning weakness. Next, the March lows (2040), which continues to come into play on multiple time frames. The rising 200-day moving average currently stands around 2046. This is a significant long-term support level.
To sum it up, the market needs to hold the 2040 level to keep the current uptrend in tact. Besides that, the daily fluctuations act as noise from a trend following perspective. If that level is breached and we closed below it on a monthly basis, that could set the stage for a bigger correction that so many have called for. We always prefer to let price confirm one way or another.