The break above 2,561 indicates a target of 2889. Let’s say 2,890 to round up the numbers. Interestingly, 2,891 is the beginning of a gap —which looks like a breakaway gap— from which the STI broke below a minor support. At the time the STI reached 2,891 on March 9, the moving averages had already performed dead crosses with each other.
Going up is a bit like running uphill. The index would require a lot more momentum to run uphill than it did running downhill. And the fuel behind this momentum is volume. At present there is not much of this fuel.
The S&P 500 (SPX) closed at 2,799 on April 16. On April 8, the SPX broke above its resistance at 2,630 and its upside from this breakout is 3,023. The SPX suffers from the same drawback as the STI — there is a lack of conviction behind the breakout.
Although we would like to believe this is a new bull market, the market form doesn’t seem quite like a bull market’s. For instance, the daily candlestick chart shows higher volume on the black candle days, and lighter volume on the white candle days, and we ended the week on a black candle.
Whatever the case, both the STI and SPX have definitely experienced more than a dead cat bounce.
