Last week we cautioned that overbought market breadth readings usually precede a subsequent sideways/down move in the major indices, and that is exactly how the week unfolded. After a brief spike up on Monday morning, the SPX settled into a sideways move until Thursday, when market breadth dropped to oversold levels:

Now the pendulum is swinging the other way, and market breadth is rebounding from oversold readings, which argues in favor of an up phase. Bullish expectations are further reinforced by the fact that the SPX retained its weekly buy signal during the sideways phase, and now both the daily and weekly signals are bullish.

The weekly signal will turn bearish on a break below 3400. Weekly targets 3710 and 3470: