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Minor Flag pattern in S&P after 5 day 3% rally leaves prices bullish but overbought

Minor gains in US futures along with Europe but overall very little progress in the last 24 hours after a 70 point rise in 5 days for S&P and volume remains quite light in Europe and has been this week in the US ahead of the 3-day holiday weekend-  2097-2100 should prove important for S&P while 2084-5 important and then 2078 on the downside for today into next week- US Dollar index and TY largely unchanged this week but have seen some backing off in yields from resistance in US and in German Bund yieldswhich have fallen off more than 11% this am, getting back down UNDER 13 bps but nearing support which should have importance.  New CFTC data arrives at 330 which will be interesting to see as OIL LONG Specs have accumulated the longest Net long positions since 2014 while Commercials have begun to hedge at increasing levels, so the spread has begun to widen-   Bottom line, combination of increased sector rotation into Technology, Financials, ongoing Bearish sentiment and constructive breadth sentiment should drive indices back to new highs over the next month-  For now, bullish stance makes sense looking to buy dips over the next 3-5 days, or for aggressive traders, being short with 2100 stops and targets down at 2078, looking to cover and buy-  Premkt gainers for this am:  RLYP, TTNP, VSLR, FEIC, BIG, VRX, ULTA, JKS, LC while on downside- PANW, FDUS, TEX, GME, PTX

 

Sharp rally from Tuesday-Wednesday has stalled out, with 4 hr charts getting as overbought as they've been all year.  However,  daily charts remain quite constructive and not overbought, and have made good enough progress to think that movement back to new highs should come about in the weeks ahead-   2 hour charts above show the potential for a Wave 4 type flag formation after a settling in volatility after the early week spike-  Upside should be limited to 2097-2100 and represent a chance for profit-taking for aggressive short-term traders.  However, those with a 4-6 week timeframe are likely better just maintaining a long bias, using dips to buy

Bund yields have dropped this am to multi-day lows, and should be nearing a good area of support as of next Monday/Tuesday where any further weakness into 11 bps could be used for profit taking for Bund longs, thinking that yields stabilize and turn back higher

Poor manufacturing data resulted in 2 yr yields reversing course after a failed breakout attempt initially, as Fed futures data indicated the likelihood for a june hike had dropped to 28%.  the likelihood of June hikes seems to have directly followed 2 yr yield movement , making this important to watch.  Breakouts at this point back over 93 bps would likely carry higher to 1% and allow for chances for rate hikes to continue to increase to 50% or higher into June