My friends, stocks continued their summer melt up last week.

For the S&P 500, it was the third straight positive week, breaking the pattern of two up weeks followed by one or two down weeks that had kept price trapped within its range.

More importantly, the S&P 500 is beginning to see the bullish follow through we wanted from the prior week’s breakout, ending more than +2% above its June 2nd high.

As with all breakouts from trading ranges, the stronger the follow through toward its breakout targets at 7925 and 8003, the better.

On the short-term daily view, we can see the range breakout has taken the form of a bull flag breakout.

This new short-term play provides two additional targets at 8178 and 8273 if there is strong and sustained follow through.

There’s one catch.

At this point, we have only the trigger day from Thursday and no additional closes higher, so this new bull flag is not yet confirmed.

This will be a priority to watch this week.

A bull flag failure could quickly put the 21EMA into play, along with the large unfilled gap near 7600 left behind by the August 4th breakaway.

That would turn what currently looks bullish into a failed bull flag, bull trap and potentially a much deeper throwback retest.

At the same time, the first target, the Fibonacci extension at 7857, is now less than 1% away. The market doesn’t have to travel very far before giving us another answer.

As encouraged as we are by the improvement in price action over the past three weeks, we cannot discount a throwback scenario from playing out.

Some of the forward correlation studies I have shared indicate the path ahead may prove considerably more volatile and challenging than the remarkably calm price action of the past few weeks would suggest.

Note the two divergent pathways, including potential trap moves within both the bullish and bearish scenarios.

Markets rarely make it as easy as the straight-line forecast suggests.

Within my own charting, I have also updated the longer-term framework using two narrowing trendlines drawn from the two major highs and lows over the past year.

The next three targets remain inside this larger wedge, while the final two sit above it.

Eventually one of those trendlines is going to give way.

When it does, price will be sending us another message.

We’ll be watching both boundaries as we navigate the remainder of the year.

We now have five targets in play at S&P 7857, 7925, 8003, 8178 and 8273.

The highest target at 8273 is +6.26% above Friday’s close. A throwback move is approximately -2.12% lower.

On the percentages alone, that is an attractive risk/reward setup.

6.26 ÷ 2.12 = 2.95-to-1, essentially 3:1 reward/risk.

That means risking roughly $1 for the possibility of making $2.95. Mathematically, a setup with that payoff would need to work only about 25% of the time to break even before considering gaps, slippage, commissions or imperfect exits.

Yes, this is the kind of asymmetry worth paying attention to.

As my long-term members will remember, when we have numerous upside targets simultaneously in play, the probability of the trend extending higher for longer has generally been favorable until price tells us otherwise.

Right now, price hasn’t proved otherwise.

Collectively, these price-action plays continue to provide a bullish short- and longer-term foundation for additional highs.

As I’ve shared in my notes, every swing strategy I currently use is on a buy signal.

Most, but not all, are now shifting into confirmed buy-signal conditions following last week’s additional upside follow through.

Those that have not yet confirmed don’t need much more.

A little additional sustained strength would do it.

In other words, the probabilities favor this breakout continuing.

But favorable probabilities can still get better.

The S&P 500 also remained in a stochastically overbought condition throughout last week, which is something I like to see during a strong trend.

Strong markets can remain overbought far longer than most investors expect.

Holding an overbought condition for longer, rather than seeing strength immediately sold into as occurred during the second half of July, would be another positive indication.

On the flip side, summer volume remained light, placing at least a small question mark over the sustainability of the breakaway.

Much like the S&P 500, the Nasdaq 100 (QQQ) produced encouraging price action.

Price has not yet broken above its June high, but another bullish reversal play has developed within the range, targeting approximately $791, roughly +8% above Friday’s close.

Now we watch for follow through or failure. No need to guess which one comes first.

The Magnificent 7 (MAGS) is still working on recovering from this summer’s bull-trap reversal, extending its broader consolidation to more than nine months.

A strong and sustained move above this year’s $71 high would be a significant development, increasing the probability of seeing S&P 8000 sooner rather than later.

The potential cup-and-handle structure targets approximately $83, which is more than +20% above last week’s close.

Nine months of consolidation can build a lot of fuel.

But only a breakout gets to light the match.

The Russell 2000 (IWM) reached another new high last week, breaking above its short-term cup-and-handle and putting the $317 target into play.

Now comes the part that matters:

Can it stay broken out?

Strong and sustained follow through would reinforce one of the healthier developments underneath this market.

A move back below approximately $302 would raise the possibility that the latest breakout is turning into another bull trap.

The Dow (DIA) was the only major index to finish lower for the week.

After holding its ground, refusing to roll back over and ultimately pushing to new highs, price is now flagging just below this year’s cup-and-handle target at $554.

Given the sustained upside follow through, this still appears to be a likely target capture, with this month’s $546 high the final hurdle to clear.

Beyond the major indexes, some of this summer’s fallen leaders are trying to get back their mojo.

The Semiconductors (SMH) are working through a bear-trap reversal, but they still need stronger and more sustained follow through.

Otherwise, the recent rebound could simply become the right shoulder of another rollover.

We can see a similar bear-trap reversal developing among the Memory/DRAM stocks.

Here too, we want to see higher highs and continued follow through rather than another lower right-shoulder reversal.

Software (IGV) continues to experience volatility within its multi-year range. Numerous reversal attempts are working, but none has yet been strong enough to finally break the group free.

AI & Technology (CHAT) is rebounding from its recent correction with another bear-trap reversal in motion targeting a new high.

Same test.

Follow through or failure.

Data Center & Digital Infrastructure (DTCR) has a reversal play developing as well.

With last week’s matrix, these were the top 10 winners and losers:

A few things jump off the page.

Energy is impossible to miss.

But look beyond the biggest winners and there is an even more important story developing underneath the market:

Leadership is broadening. Risk appetite is expanding. And the market is becoming less dependent on the Magnificent 7.

The rest of this week’s report goes beyond what happened and focuses on what to do next.

We’ll break down where leadership is broadening, which areas are becoming more attractive, what this week’s catalysts could change, the key price levels to watch, and the Bull, Base and Bear scenarios for the week ahead.

The objective isn’t simply to know what happened. It’s to know what to do next.

Upgrade to continue reading the full report.

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Hello friends. I truly hope this finds you in a nice spot at home or out on vacation. :)

If you haven’t been paying much attention to the markets, there was a lot of drama last week, but not enough to break the major indexes free from their trading ranges.

Let’s review!

The Bottom Line

After the first two consecutive negative weeks since March, attempts to roll the market over further and break below the trading ranges were met with strong buying support.

The bears had their shot and failed to finish the job. Support held, and once the forced selling eased, buyers came back into the damage.

Forced liquidations in leveraged AI positions helped explain part of the sharp corrections in many of the first half’s top-performing stocks.

More importantly, sectors and stocks that had corrected significantly in July attracted buyers.

Concerns over rising yields, the Fed, and Iran-driven energy prices remained, but investors mostly looked past them as they positioned for the next stage of the AI cycle—one in which fundamentals will increasingly determine leaders and laggards.

Weekly Market Scorecard

The last week of July was a positive one for U.S. markets.

Nasdaq Composite: +1.6%
S&P 500: +1.1%
Dow: +1.0%
Nasdaq 100: +0.5%
Russell 2000: +0.05%
S&P Mid Cap 400: ‐0.7%

Stocks passed through a gauntlet of challenges.

The Federal Reserve remained focused on inflation. A major AI trade unwind hit heavily owned semiconductor and memory stocks. Apple and Meta received negative earnings reactions. Long-term Treasury yields moved higher.

Despite all of that, every session except Wednesday finished higher.

More importantly, Wednesday’s post-Fed decline was aggressively bought. The bearish reversal patterns that formed and triggered during the prior week failed to deliver.

The failed breakdown was the important part. The market absorbed a Fed scare, higher yields, and forced selling without breaking the range.

How The Week Unfolded

Monday: Selling pressure continued across AI, semiconductor, and momentum stocks as investors remained cautious ahead of the Federal Reserve and major earnings.

Tuesday: The market attempted to stabilize, but leadership remained inconsistent and higher long-term Treasury yields continued limiting risk appetite.

Wednesday: The Federal Reserve held rates steady, but three dissents in favor of an increase and a firm inflation message triggered a sharp selloff.

Thursday: Microsoft’s results and a powerful semiconductor rebound produced the strongest session of the week, with the Nasdaq surging 2.8%.

Friday: Amazon, Alphabet, Microsoft, and Nvidia extended the recovery, overcoming Apple’s sharp decline and allowing the major indexes to finish higher for the week.

The Price Action

S&P 500: The Bearish Reversal Was Trapped

The prior short-term head-and-shoulders pattern failed to reach its downside targets at 7,281 and 7,261.

Had those targets been reached, the S&P 500 would have been positioned for another test of the June low and the bottom of its trading range.

Instead, the breakdown failed.

That trapped the bearish reversal and replaced it with a developing short-term bullish reversal targeting approximately 7,647 and 7,665, above the June 2 high at 7,620.

This does not guarantee those targets will be reached. The developing right shoulder may require more time and price construction.

What changed is the direction of the immediate opportunity.

Price is now positioned to challenge the top of the range rather than automatically retest the bottom.

We have seen several bullish and bearish patterns become trapped inside this range. That is normal. Trading ranges are designed to produce failed moves in both directions.

The priority remains a strong and sustained break from the range.

The S&P 500 remains beneath the June high, and the market still needs enough follow-through to overcome the repeated failures that have defined the past two months.

Trading Range Continues

The S&P 500 rallied over +20% during a nine-week advance before spending the past eight weeks consolidating sideways in the range from the June high and low.

That consolidation finally generated oversold conditions last week for the first time since the end of March.

Price then tested the anchored VWAP from the March 30 low and recovered both its 21-day exponential moving average and 50-day moving average.

That is encouraging.

A strong and sustained move above the range would be better.

For investors whose fortunes are tied primarily to the major indexes, the pain has been more about individual stocks and sector exposure than sustained index losses.

The S&P 500’s early June drawdown was -5%, but many former leaders experienced much deeper corrections beneath the surface.

S&P 500 Levels

8,003: Range breakout target
7,620: June 2 high and primary resistance
7,581: Prior swing high and July high
7,500: Psychological round-number pivot (bullish above, bearish below)
7,489: July closing price
7,471: 50-day moving average
7,455: 21-day exponential moving average
7,307: AVWAP from the March low
7,237: June low and primary support
6,854: Range breakdown target

A move through 7,500 would improve the near-term picture, but 7,620 remains the level that would confirm a meaningful upside breakout.

A move below 7,237 would say buyers had lost control of the range.

Everything between those levels remains part of the consolidation.

Nasdaq 100

The Nasdaq 100 corrected -11% from its June high after gaining +35% during the preceding two-month advance.

Seen in that context, the correction itself was not unusual.

The more important development was that the apparent double-top breakdown also became a bear trap. The Nasdaq 100 rebounded from a six-day losing streak and recovered its June low.

That gives buyers something to work with, but the index still needs to reclaim its declining short-term moving averages and begin forming higher lows.

Midcaps & Small Caps

The S&P Mid Cap 400 and Russell 2000 also showed potential failed breakdowns inside their trading ranges.

Their bearish reversal patterns have not been completely invalidated. Continued movement above their right shoulders and July highs would effectively stop those setups and improve the broader-market picture.

For now, they remain potential bear traps rather than confirmed upside breakouts.

The major indexes remain inside their ranges, but the short-term evidence became more constructive last week.

The indexes also continue to hide the rolling corrections occurring beneath them. That has allowed the longer-term index trends to remain more positive than many individual portfolios may feel.

The Best Dip Is The One That Fails

As I shared in my notes last Wednesday, I outlined what we needed to watch for.

Paid members can continue with the risk-management discussion, the complete July performance matrix, scenario probabilities, potential opportunities, and the portfolio plan for the week ahead.

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After gaining more than 20% over nine straight weeks in April and May, the markets have mostly remained stuck in consolidation mode.

Consolidation through time, rotation and dispersion.

Yet, despite all the concern, the S&P 500 is down only 2.7% from its June 2 high.

That may be hard to believe for investors whose portfolios have been taken down by stocks connected to artificial intelligence—including semiconductors, robotics, quantum computing and nuclear energy—as well as alternative energy, cannabis, space and airlines.

At the same time, this consolidation has been much kinder to those who were more diversified and less concentrated in the speculative, highest-growth areas of the market.

Exposure to commodities, energy, financials, real estate, healthcare, insurance and utilities has proven quite helpful this July.

As pure-growth, high-beta and momentum stocks have been getting clocked, good old boring stocks offering value, dividends and lower volatility have prospered.

Exposure outside the United States, especially in China, Hong Kong and Singapore, has also been profitable. That has been particularly true for those who were stopped out early from their South Korea exposure, which has dropped 30% from its June high in only five weeks.

Sometimes it works this way.

Especially after a long stretch that tremendously favored concentration and massive speculation over diversification.

In the last report, I said earnings reactions would likely determine whether the market breaks out or breaks down. That message still holds true this week.

The next batch of earnings reports includes Microsoft, Meta, Amazon and Apple. Unfortunately, we continue to see a market in which good news is being sold.

The Fed also meets Wednesday. GDP and PCE inflation arrive Thursday. The Iran war—and its effect on oil prices and Treasury yields—will be watched closely as well.

The market has spent weeks searching for something powerful enough to force it out of this range.

This week should reveal whether rotation continues rewarding those who are diversified or begins shifting back toward the stocks that have corrected sharply this July.

How The Week Unfolded

Monday: Stocks initially attempted to rebound, but the move faded as oil prices and Treasury yields rose. Growth stocks finished under pressure.

Tuesday: Semiconductors snapped back sharply, led by memory and AI infrastructure stocks. The PHLX Semiconductor Index gained 5%, briefly suggesting the momentum selloff might be done.

Wednesday: Trading slowed ahead of Alphabet and Tesla earnings. Semiconductors held up, but software and mega-cap growth remained weak.

Thursday: Alphabet and Tesla shifted the market’s attention from headline growth to spending, margins and cash flow. Growth stocks sold off as oil and Treasury yields moved higher.

Friday: Broader participation improved as oil and yields eased, but another semiconductor reversal kept the Nasdaq under pressure.

Last Week’s Top 10s

The contrast is hard to miss. Crude oil, energy, commodities, metals and defense dominated the winners, while mega-cap growth, consumer discretionary, software, alternative energy and other speculative areas absorbed most of the damage.

That is what rotation and dispersion look like in practice. The S&P 500’s relatively modest decline concealed a much more aggressive transfer of leadership underneath the surface.

The Price Action

S&P 500

The S&P 500 has continued coiling within its consolidation range.

My top priority remains whether price breaks above the June high or below the June low and, more importantly, whether that break receives strong and sustained follow-through.

Within the coil, however, another short-term setup caught my attention last week - a new bearish head-and-shoulders pattern targeting 7,281 and 7,261.

If price follows through lower rather than trapping sellers with an upside gap fill, this setup would lay the foundation for a retest of the June low. By extension, that could complete a larger double-top-like formation.

It is important that we do not see it play out that way this week.

Nasdaq 100 (QQQ)

After the coil broke lower and price tested the June low, QQQ attempted to bounce last week.

The bounce failed. Price finished the week just below the prior June low and its anchored VWAP, or AVWAP, from the March 30 low.

This is a critical area for price to defend this week.

If the new bearish double-top and range-breakdown setup receives strong and sustained follow-through toward its $624 target, the current 8.6% pullback could extend to 16.7%.

Magnificent 7 (MAGS)

The price action continues to show significant deterioration.

Last week, MAGS fell back below its 200-day moving average, with a potential new double-top formation under construction.

For the Nasdaq 100 to trap last week’s breakdown and, by extension, for the S&P 500 to trap its own reversal within the coil - Microsoft, Meta, Amazon and Apple need to produce much better earnings reactions this week.

Semiconductors (SMH)

After its historic rally from the March bear-trap low to the June 22 high, SMH has been correcting and consolidating.

Price is now testing an important neckline area near its AVWAP from the March low. A new bearish reversal setup targets $461 if support breaks and receives follow-through this week.

Notice that this is the same general setup we have seen three times over the past year. Each previous occurrence developed near the end of a pullback before the next upswing began.

Will the fourth time produce the same result?

I would not bet the farm in either direction. After such a historic rally, SMH has earned more time to consolidate before its next sustained move becomes clear.

Russell 2000 (IWM)

Up 18% year to date and still the best-performing major index this year, IWM is testing and defending its AVWAP from the May low.

This is an important pivot area to watch - not only this week, but over the next several weeks.

The coil could still break lower, putting the bearish head-and-shoulders reversal setup and its $278 target into motion.

The charts have already drawn the bearish roadmap. Now sellers have to prove they can follow it.

A head-and-shoulders pattern is not a breakdown. A target is not a destination. Until price follows through and holds below support, the market can still pull the same trick it has used repeatedly—shake everyone out, trap the bears and reverse higher.

Bears have the setups. They do not have confirmation.

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Hello, my friends!

I hope this finds you in good spirits and still looking for opportunities when others see nothing but problems.

The world is often shaped by how we choose to see it, and our active choices can gradually become our reality.

Choose wisely.

C.E. Kirk

The Bottom Line

Last week delivered strong earnings, cooler inflation, and resilient economic data.

Yet the market’s trading-range consolidation continued for a sixth consecutive week following the June 2 high.

What looked one week ago like a market preparing to break out now appears more likely either to remain trapped inside the range for longer or, particularly in the Nasdaq 100, attempt a breakdown first.

It brings to mind a familiar quote shared many times over the years:

The market may ultimately reach the outcome many investors expect, but it often gets there through enough reversals, false breakouts, volatility, and frustrating detours to shake people out along the way.

Last week, all four were on display.

The major indexes failed to break above their multi-week ranges and then threatened a much deeper retreat.

Exceptionally strong earnings reports were sold.

The market’s primary leadership sector, semiconductors, broke down under increasing selling pressure. The PHLX Semiconductor Index fell approximately 10% for the week and finished 20% below its June 22 record closing high.

Memory stocks and several other former leaders of the AI trade suffered even greater corrections. Micron, SanDisk, Seagate Technology, and SK hynix experienced some of the most aggressive selling. The magnitude of the declines was notable because memory companies had benefited from strong pricing, AI-related demand, and optimistic expectations surrounding high-bandwidth memory.

The key question is whether this is primarily an unwind in extended and overleveraged stocks or whether the market is beginning to anticipate:

• Slower memory pricing gains

• Additional future supply

• Greater competition

• Lower long-term margins

• Reduced hyperscaler capital spending

• More efficient AI models requiring fewer resources

The group may eventually provide excellent opportunities.

Falling prices alone do not create a confirmed entry, especially when there are bearish reversal plays in motion.

Last week’s expectation that improving price action could lead to an upside breakout proved too optimistic. The setup was constructive, but it required confirmation above the June high. That confirmation never arrived.

Instead, semiconductor leadership deteriorated, the Nasdaq and S&P 500 fell below their 50-day moving averages, and strong earnings repeatedly produced weak price reactions.

Last week’s upside targets were conditional on a confirmed breakout. The market never provided that confirmation.

The bulls had their chance. They did not finish the job.

Yet the weakness did not take the entire market down with it.

Much of the capital leaving technology rotated into financials, health care, energy, real estate, consumer staples, transports, and other areas beyond the AI trade.

That rotation remains one of the most important reasons the broader market has not experienced a full breakdown.

The market is correcting its most speculative and leveraged excesses while, so far, preserving much of the broader structure.

That process has been painful for anyone who was heavily positioned in former leadership and slow to adjust. However, wringing out speculators, reducing leverage, resetting valuations, and replacing weak holders can ultimately place the market on firmer ground than if those excesses had continued building.

The central question is whether this remains a concentrated leadership reset or begins spreading into broad liquidation.

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Hello, my friend. I hope this finds you in exceptionally good spirits this summer weekend.

All things considered, the stock market continues to hold up remarkably well, even as many investors periodically check their portfolios between summer vacations.

Last week brought another collection of challenges:

• Reversals in leading semiconductor stocks

• Higher Treasury yields

• Renewed difficulties with Iran

• Sharp swings in oil

And what happened?

The dip buyers showed up. Again.

Reflecting the summer hammock pattern like the photo above:

The S&P 500 and Nasdaq Composite finished higher as investors continued buying weakness across AI-related technology and mega-cap growth stocks.

Once again, one down week was followed by two advancing weeks, just as we saw in June, keeping the higher trading range intact.

Beyond the S&P 500 and Nasdaq, the Dow, small caps, mid-caps, and several economically sensitive sectors were weaker by comparison.

Despite that uneven participation, the market passed several important tests.

Stocks absorbed:

• Renewed geopolitical escalation

• An eight-basis-point increase in the 10-year Treasury yield

• Sharp semiconductor profit-taking

• Higher oil prices

• Multiple attempted technical breakdowns

And still avoided meaningful technical damage.

The S&P 500 remained above 7,500. Semiconductors stabilized. Failed breakdowns attracted buyers. Momentum and swing systems returned to buy signals.

Most importantly, price is now sitting directly at resistance.

The S&P 500 closed Friday at 7,575, two points beneath the lower boundary of the decisive 7,577–7,620 resistance zone.

In sum, price action is beginning to improve within this period of consolidation.

The next step is to prove that improvement can hold and develop into the next leg higher.

Performance Matrix

The tables below show where the money went, where it refused to go, and which trends are doing more than merely surviving.

This week’s message is fairly clear.

Mega-cap growth and AI leadership took back control, with Meta and NVIDIA doing most of the heavy lifting. Energy, oil services, commodities, agriculture, and selected international markets also joined the party.

Several speculative and economically sensitive groups were not invited.

Cannabis, space, lithium, airlines, homebuilders, and alternative energy remained under pressure.

So yes, this was a risk-on week.

It was not a buy-everything-with-a-ticker week.

Capital continued rewarding established leadership, improving trends, and price action already supporting higher prices. Weak structures were still punished without much sympathy.

That is why these tables matter.

The S&P 500 may be testing resistance, but beneath the surface, stocks, sectors, industries, and asset classes are already placing their bets.

Let’s now review the setup at resistance, the three forces likely to determine the next move, what would signal a bull trap, and how I am positioning around the consolidation.

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I hope you had a wonderful Independence Day weekend.

We enjoyed a good holiday filled with food, friendship, and meaningful conversations. My wife and I also celebrated our 33rd anniversary, even though it still feels like yesterday that we were beginning our life together.

Each year, on our anniversary, we watch the video of our wedding ceremony. It is a good reminder of how quickly time moves and why it is important to step away, reset, and keep perspective.

The market is important, but it is not everything.

Time away gives us a chance to return with a clearer mind. Be sure to make time for it before the summer ends. The market will still be there when you return.

As we prepare for the week and month ahead, I have a few thoughts to share about the market, the opportunity, and the discipline this market will likely require.

The Bottom Line

The market continues to consolidate constructively through time, rotation, and dispersion.

Last week brought meaningful profit-taking in leadership stocks, especially across semiconductors, AI infrastructure, mega-cap growth, and the broader AI trade. After the historic run those areas have had, that reset looks more necessary than alarming.

The more leadership stocks consolidate before earnings season, the lower the risk of significant “sell the news” reactions. If expectations cool and positioning resets now rather than later, good news has a better chance of being rewarded.

For now, the price action still looks more like consolidation than distribution. The market appears to be building a higher base of support that could help extend the uptrend this month, especially if money rotates back into mega-cap growth and AI leadership.

Until price proves otherwise, the market has earned the benefit of the doubt.

Key Takeaways

• The market is digesting a strong two-month run without breaking trend.

• Profit-taking remains concentrated in the most extended leadership areas.

• Capital is rotating rather than leaving the market, which keeps the broader setup constructive.

• Dispersion is increasing, so stock selection, entry points, and risk control matter more.

• If support continues to hold and leadership stabilizes, the odds still favor an upside breakout this month.

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It is good to see you my friend. I hope this finds you doing well this holiday weekend.

Let’s take a moment to review where markets currently stand three weeks after the historic winning streak ended in the S&P 500.

The Bottom Line

The market is consolidating through time and rotation rather than through price. As we’ve seen numerous times, this is bullish until proven otherwise in this bull market.

Sellers have had numerous opportunities recently to take control, including after the Fed meeting, but buyers are not slowing or halting their buying of every minor dip.

Price is consolidating and coiling inside June’s high and tight trading range, with leadership, breadth, and momentum still favoring higher prices.

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Hi friend!

I hope you are well and enjoying the summer so far. Thank you for giving me another opportunity to share my thoughts as we prepare for another big week!

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The Bottom Line

The S&P 500’s historic 9-week, 20% winning streak ended last week with a successful bull-trap reversal.

That does not break the longer-term uptrend. It simply confirms that the market was extended and due for some profit-taking, risk repositioning, and consolidation.

The sellers finally landed a punch on Friday. Now they have to prove they can keep the pressure on for more than one day and take out the support levels below.

Until they do, the benefit of the doubt still belongs to the persistent dip buyers and the longer-term uptrend.

This week brings several potential sell-the-news catalysts, including CPI, PPI, Oracle earnings, Adobe earnings, Apple’s WWDC, and last, but not least - the SpaceX IPO. In the following week, markets will focus on the first Warsh Fed meeting.

The plan is simple: tighten the short-term risk plan, respect the longer-term uptrend, and make sellers prove they can do more than create a one-day scare.

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The Bottom Line

After eight straight weekly gains, the S&P 500 still has price-action support for higher highs, but the next phase depends on whether buyers can sustain the breakout, absorb rotation, and keep shallow pullbacks well-contained.

Eight-Week Streak Deserves Respect

I’m sure you’ve heard that markets climb the wall of worry.

For this market, it has been a long, steady, and historic climb lasting 8 straight weeks and gaining +17.3%. Persistent strength like this has been seen only twice this century and only nine times in total since 1950:

As this study shows, forward performance following these winning streaks was strong:

• Positive 8 out of 9 times, or 88.9%, one month later

• While the average 1-year gain was slightly less, 5 of the 9 times it was larger

• Maximum drawdowns were modest with one exception - the 1987 crash (-20.7%)

The main takeaway is that what we have seen since the March low remains bullish until price action proves otherwise.

By another measure, this also ranks as the 20th strongest rally since 1950:

I share these studies for context, not certainty. The sample sizes are small, and we should always be careful about overfitting market history.

But the message is still useful: rare strength often leads to more strength, as long as price action continues to confirm the setup.

New Bullish Play

After capturing its two targets in the S&P 7,400 target zone during the seventh week of this winning streak, the post-target consolidation lasted only three days ending last Tuesday.

Like so many dips during this rally, the three-day pullback was limited to -2.4% before buyers stepped in.

As I shared in the notes, the short-term price action was easy to read and evaluate.

A new short-term bullish reversal play formed, triggered, and then followed through last week. This new play successfully filled the May 15th gap before pulling back. More importantly, it also laid the foundation for a potential move toward S&P 7,533 and 7,575, or roughly +0.8% to +1.4% higher.

This shows the value of seeing periods of consolidation and minor dips along the way.

As long as the -2% to -3% dips continue to get bought, the path of least resistance is higher as strength continues to beget more strength.

This week, the key short-term test is straightforward: can the S&P 500 sustain a breakout above the May high at 7,517, or does it break below last week’s low at 7,333?

On a measured-move basis, a confirmed breakout would target 7,701, while a confirmed breakdown would target 7,149.

On a short-term basis, more sideways consolidation is always possible after a move like this. If there is a sustained break below last week’s low, I will also be watching to see if the rising 21-EMA provides trailing support above the first Fibonacci retracement:

As long-time subscribers know, I have more confidence that a longer-term target will be captured sooner than later when short term bullish price action plays have also laid the foundation to, or just above, the same level.

Right now, both the short-term and longer-term price-action foundations are pointing in the same direction: higher. The highest potential target is now 7,701, roughly +3% above current levels. If reached, that would also fulfill the final longer-term range-breakout target at 7,688 from the March pullback:

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