After nine years of this raging bull market in stocks, this is the most important question for investors now: Bulls or bears — who is right? Let’s start with a chart.

Please click here for the annotated chart of S&P 500 ETF SPY.  Similar conclusions can be drawn from a chart of the Dow Jones Industrial Average DJIA.  The other two popular ETFs — Nasdaq 100 ETF QQQ, and small-cap ETF IWM, — look different. Since the most money is tied to the S&P 500 Index SPX, this is the index to look at if one could look at only one chart. Please note the following from the chart:

• The rally failed at the resistance level.

• The market is now around the trend line.

• If the trend line decisively breaks, the next two support levels are shown on the chart.

• Previously the relative strength index (RSI) traced higher lows. But now RSI has traced a lower low.

• Volume is unremarkable.

The only reasonable conclusion that can be drawn from the traditional technical analysis is that the market has lost its momentum, but is still not in the imminent danger of a bear market.

Special factors

There are several special factors coming into play.

• Window dressing is in play. Some money managers buy winning stocks at this time so they can show in their reports that they were holding winning stocks.

• Some money managers may rebalance at this time and take profits.

• New money flows into the market during the first couple of days of a new quarter.

• There is a holiday (July 4) in the middle of the week. This will reduce liquidity and increase volatility.

• The jobs report is due next Friday (July 6). Often the market makes a big move ahead of the jobs report based on rumors and estimates….Read more at MarketWatch.

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