Weekly Market Outlook – Running Out Of Room To Rally

And for the record, a lack of volume is also a problem for the S&P 500's rally, as measured by its daily volume. Volume has been waning steadily since early March, when the index has been rallying. And it may be near a natural peak anyway.

As was noted above, the index bumped into an established ceiling on Friday - a ceiling that connects all the key highs since October. Here's a closer look at it, plotted in red. If the bears were going to make their stand, here's an ideal place to do it.

S&P 500 Daily Chart, with VIX and Volume

Source: TradeNavigator

Given the scenario, one has to plan for a pullback from here. Such a call does "fight the tape," so to speak, counting on a reversal of current momentum rather than betting on the establish trend -- the antithesis of momentum trading. From an odds-making perspective, though, there are too many things in play that could up-end the market here, and not enough clues to suggest there's room for more upside.

Do understand, however, that the bigger-picture rally is far from being broken. For the S&P 500 there's a thick layer of technical support all the way down to the 100-day moving average line (gray), currently at 3812. Recent history also says any pullbacks are to be short-lived.

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