June has largely been a month of consolidation for the S&P 500. Despite the fact that the index hit multiple new highs this month, we’re finishing the month nearly right back where we started. Having entered the summer with strength, the market is flashing signs now that consolidation might be in order in the near future.
For those inclined to buy, the most reliable recent “buy zone” has been in the range illustrated by the bottom two parallel black lines on the 30 minute chart above. The market has found itself moving gradually higher within the range between the two sets of rising black lines since December, and looks set to continue doing so, testing the ranges at intervals as it goes.
That tendency is even more apparent on the daily chart. The strength of the rally is fully intact, though mature. Should the S&P begin to consolidate, there is much room to the downside below the 2400 level. Downside support levels below that currently fall at the 200 day moving average at 2300, and the lower end of the broader intermediate term rising range at 2275. Below that, there is further strong support at 2150.
While the market shows all signs of continuing to rally in much the same fashion as it has year to date, its good to keep in mind that seasonal factors often work against it during the summer, and keeping critical support level in mind is always a good idea. Good luck out there.