Market Analysis (13 May’21)

If market volatility continues to rise during the next several weeks, I would expect the S&P500 index to bottom early June and stage another rally into the 4400 area in July-August timeframe. If the August new all time highs come on diverging breadth, it would suggest a potential multi-months top. This scenario is shown on the following two charts: ES 4h chart and SPXA50r daily chart.

ES, 4h

If this scenario unfolds, this is how SPXA50r indicator will behave:

SPXA50r, daily

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