Skepticism is retained- and that's bullish, but doesn't obviate shakeout risk. In fact our weekend call was for a retreat before recovering somewhat, but not a dramatic move in the post-Quarterly-Expiration period.

Freepik

Pattern evolution as outlined for weeks continues (and that up grinding with better breadth needed to get any oomph out of the market, with some life returning to small-caps). If you ask about tomorrow, I think recovery for Oil plus some small-caps.

I expanded on this in the weekend report. We focused a bit on the action, on minimal or (for now) low relevance of Chinese talks (better than none), and a breakout I was looking for by SoundHound. I focused on SOUN in a morning Tweet too.

SoundHouns as you know it was positioned to take-off a bit. However it may or may not have to work-through a sell-strength crowd, at the same time some of that may already be behind. Volatile and exciting as such stocks are 'bets' on future technology and hopes to emerge superior.

As to S&P (SPY), the pattern call included an inverse 'head & shoulders bottom' of last October, the upward but erratic early year action, a Spring rally, then in most recent action, upward ahead of the Fed (including forecast quick selloff and rebound into Quarterly Expiration), dip after (today), then up a bit but a bit foggier as we should be entering a shakeout phase, but nobody wants it.

When I say 'nobody wants it to decline', I'm referring to investors like thee and me most likely. The big money managers typically DO want a big shakeout as they generally have under-performed S&P and stayed bearish all year. We as you know believed the 'real' market crashed last year and there was no such risk in this market, although the mega-cap leaders were and are vulnerable to a setback as extraordinary gains are not sustainable absent better breadth.

In-sum: 

Anticipated post-Expiration retreat followed by partial recovery and at least some better small-cap action, if not overall improved breadth. Sure their is a temptation to sell strength, and pundits want this lower. But investors are almost 'feeling their oats' in a few stocks, and are as negative as portrayed by some analysts. That doesn't mean we won't dip again, just that dips will likely be bought, not sold, as money managers attempt to position for the 2nd half.

Market moving in-harmony with expectations, there is real public enthusiasm for this market, even if the pundits and analysts are trying to dampen the U.S. spirit, presumably so they can buy in 'cheaper', since they missed the boat. 

Anyway I think a bit more upside and the focus will and is shifting to smaller-cap stocks. More of that at Quarter's end too as Expiration isn't an end-all and shakeout notwithstanding, I anticipated gains into early-mid July as well. More so in particularly stocks, not so much stretching the expensive mega-caps.

If I had to 'bet' on Wednesday's intraday action; I suspect SOUN gets a further pop; sets-back; but few realize it's possibly setting-up a parabolic chart pattern; if so it pops again after that. I also think Big Bear (BBAI) quietly recovered today and is a candidate to pop, though favorable Defense Dept. news would help it along. AEHR Test Systems is very stable so that's fine (AEHR).

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