Even if prices appear to be clawing their way through the overhead supply at around Dow 8,000 and S&P 500 825 to 875, the going is getting tougher.
The highest that the S&P has achieved so far was the high of Thursday, April 2, at 846, before it was turned aside on a minor reversal this Tuesday. Volume has been on the low side on both advances and declines, but this week that was no doubt due to the impending holiday weekend.
While the more senior averages have been slugging it out and making just minor progress, the Nasdaq has been moving along at a faster pace, helped by the dramatic runs in the technology sector and, more recently, in the consumer discretionary sector.
The major resistance band in Nasdaq is at 1,290 to 1,652, with the January closing high of 1,652 its next objective. And if Nasdaq can conquer it, perhaps it could claim to be the first to have reversed its major trend from bear to bull.
But to claim the prize it will also have to break though the Nov. 4 closing high of 1,780, and that's a real reach -- at least for now. With the internal indicators so thoroughly overbought and sentiment against a major move higher, it is probable that Nasdaq, like its brothers, will have to be content with a pullback and broader consolidation that could last for the remainder of this year.
And speaking of sentiment indicators: Standard & Poor's points out that Jason Goepfert, of sentimentrader.com, has noticed a major shift in Rydex funds to their most bullish stance since August/September 2000 and October 2007 -- which were terrible times to invest.
Since this is a recognized contrary indicator, it may be telling us that the rally has almost run its course and it's time to go to the contra exchange-traded funds (ETFs).
Another place to look is gold. My Trade of the Day, the SPDR Gold Shares (NYSE: GLD), is on the rise. If purchased now, GLD could yield nearly a 50% move.
Sam Collins is a contributor to OptionsZone.com.
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