The market is closed on Monday, July 4, in celebration of the Independence Day holiday. The next STU will be published on Wednesday, July 6.
[Bottom Line]: Pre-holiday trading slowed, which is natural, but stocks still managed to tack on to the strong run that started on Monday. The Dow, S&P and NASDAQ all ended the week up by more than 3%. These indexes have covered a lot of ground in a short period of time, so an impending near term decline is normal. But as long as Monday's lows remain intact, the next Minor-degree wave of advance is underway and progressing higher.
The S&P has carried back to chart resistance, which includes the highs of November 3, 2015, April 20, 2016, June 8 and June 23. Measures of market breadth and volume have lessened from their strong readings earlier this week and the NYSE Tick divergence (15-min. bars) that we noted in the prior Update remains intact. So it would be natural for the stock rally to pause. A near term decline may even be sharp initially, but if the next Minor-degree rally started at Monday's low, the decline should ultimately terminate above this low, which is 1991.68 in the S&P 500 and 17,063.00 in the DJIA. A decline below these lows would invalidate their wave labels and portend much greater bearish potential for stocks than is currently indicated.
So, Monday's lows (June 27) represent the start of Minor wave 3 (per the S&P chars) or Minor wave 5 (per the Dow's potential structure). In both cases, the blue-chip stock indexes should reach new highs.