The S&P 500 is pulling back towards its rising 50-day average and potentially towards its regression trend channel. We have an ellipse turning point indicator at the lower end of the channel about –1.75% from here.

The pullback in both the S&P 500 and NDX held at their respective 50-day averages and triggered ellipse buy signals. Both indices are now above recent MOB bands where the declines started from, and this is bullish.

Both the S&P 500 and NDX are into an area of resistance accompanied by momentum divergence. This continues to be a place to not get aggressive on the long side.

Amazingly, the S&P 500, NDX, Russell 2000 Mid-Cap (MDY), and the Dow Transports are all into resistance zones with momentum divergence in most cases. This is an important area to look for either a change in trend or a push higher for continued strength.

We put on a short in both the S&P 500 and NDX last week as both reversed at MOB target bands and broke below their short-term uptrends.

A number of indices had a good 4% to 6% rally off the MOB and Ellipse support areas outlined last week.

The S&P 500 has pulled back to a support area identified by an ellipse turning point indicator and the 50-day average. This is an area to expect a short-term rally.

The S&P 500 reversed quickly last week from its short-term pullback. Upside momentum remains favorable.

The S&P 500 has been hovering around the MFU-3 target area of 4225 since late April and just recently successfully tested its 50-day average and triggered an ellipse buy. A weekly close above the most recent high would be positive and will likely lead to the next leg higher. On page 3, we show the weekly chart of the S&P, which remains well contained within its regression trend channel.

The reversals we talked about in our last report on May 25 now have a few indices, such as the NDX and Russell 2000 breaking out above important resistance zones.

Most of what we talked about last week remains the same. Here we wanted to highlight a possible positive shift taking place in the Russell 2000. We will have more to say once the upside level gets triggered from the chart view below.

We got very good reversals last week in the market averages we cover for this report, and we now are seeing momentum indicators starting to hook up from being oversold.

The S&P 500, Russell 2000, and the Mid-Cap (MDY) pullback to our target zones highlighted in recent reports. This may be all we get for a pause/pullback phase.

The reversals in the S&P 500, Nasdaq Composite, Russell 2000 are taking hold. We believe there is more weakness from here.

We are cautious short-term as the following major indices are at either a Money Flow Unit (MFU) target or MOB target band: S&P 500, Nasdaq Composite, Russell 2000, and MidCap (MDY).