Stocks are having their best month since 1974 with S&P 500 up nearly 14 percent. Are we due for some kind of correction?
Seems like a good time to consult the charts.
According to top technical analyst Abigail Doolittle of Peak Theories, the S&P is probably at a key inflection point.
She says what matters right now is 1300 – a level of strong past resistance.
”If the S&P can find its way above 1300 it suggests stocks will retest the highs of this year,” she says.
However don’t get all giddy just yet. Doolittle is concerned by a pattern.
She tells us there’s something eerily reminiscent about Thursday’s action when compared to the action around May 10th – the day of the original bailouts of Greece.
“There was a 4% up move in the equity markets that day – then a little bit of sideways trading and then a drop.
Doolittle wouldn’t be surprised to see similar moves again.
"When I look at the charts I think there's a strong chance we see consolidation again."
She thinks the S&P could well move back down toward its 50-day, a move it's made in the past. "The move higher over the last 3 weeks looks unstable from a technical perspective."