iInvest® Stock Market ALERT

In our June 7th iInvest® Stock Market Alert, we pointed out that the consolidation pattern that was occurring since early February was ending, with many breadth indicators such as the S&P 500 Advance-Decline Line and the Russell 2000 Small Cap Index having bullish breakouts to new highs.
In the chart below, you can see a positive divergence between the Advance-Decline Line and the S&P 500 itself.

S&P 500 Advance-Decline Line/S&P 500:

Once the overall stock market moved into severe overbought territory earlier this year (as described in our February 6thiInvest® Stock Market Alert), over the coming weeks/months the major indices (such as the S&P 500) formed a consolidation or Pennant formation.  A pennant is a continuation pattern within an uptrend and typically has 5 waves within it.  This is exactly what has happened, and we have now broken out of the pattern, meaning the larger uptrend should now continue.

S&P 500 5-Wave Pennant and Upside Breakout

Quantitative Analysis Study

For further confirmation of the recent bullish breakouts in the stock market, iInvest® often turns to Quantitative Analysis, which is basically looking at past events to determine the likelihood of future events. 
In a recent study released by Market Tells, they point out that the S&P 500, after weeks of running into resistance around the 2740 level, “has moved decisively above that level” lately, and has posted a “rare unfilled upside gap on its weekly chart”, sometimes called a Breakaway Gap.
“From 1990-2008, this pattern essentially never occurred.  But, since the 08’ crash, we have seen 13 separate cases.  Most led to further upside over the next 4, 8 and 12 weeks.”

iINVEST SOLUTIONS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. THE TACTICALSHIFT™ STRATEGY MAY GENERATE A TAXABLE EVENT IN NON-QUALIFIED (TAXABLE) INVESTMENT ACCOUNTS. PLEASE CONSULT YOUR TAX ADVISER. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.  MoneyGuidePro® is a registered trademark of PIEtech, Inc. All rights reserved.