The bulls launched their offensive with the precision of a dawn raid on Monday, May 12, charging out of their blocks and seizing early momentum to begin the week. Strategically, the S&P 500 Index (SPX) has now completed its recovery from the recent correction, but the campaign is not yet won, advises Buff Dormeier, chief technical analyst at Kingsview Partners.
A massive 97% Capital Inflow Day served as a shock-and-awe maneuver, catching the bears flat-footed on the battlefield’s opening salvo. The generals – the Invesco QQQ Trust (QQQ) – once again led the charge, advancing 6.8% for the week. Their lieutenants – the SPDR S&P 500 ETF (SPY) – rallied closely behind, posting a 5.3% gain.
We recently noted the emergence of a bullish ascending triangle formation in the S&P 500, a tactical setup marked by steadily rising prices on fading volume. Now, the index has broken out above the 5,800 apex, breaching the pattern’s resistance threshold.
While traditional pattern rules require a breakout on heavy volume, Capital and Dollar Volume metrics met the minimum requirement, if only marginally. Plus, when isolating upside volume, the move was decisively confirmed by internal strength.
Market internals remain fortified, displaying more robust health than their price-based counterparts. Capital Weighted Volume and Dollar Volume are both marching toward all-time highs. Meanwhile, the NYSE Advance–Decline Line continues its climb, building on the momentum of Zweig’s Breadth Thrust, a momentum signal of deepening market participation.
The next key resistance lies at 6,000, while holding the 5,800 level is critical to maintain bullish control of the field. Though the bulls have seized the early lead in this latest leg of the rally, disciplined risk management may remain paramount.
Just as a skilled racer knows when to push and when to ease off the throttle, successful investors may want to respect technical levels, heed volume signals, and remain vigilant against unexpected turns. Momentum may be accelerating, but maintaining control on the curves ahead is one of the keys to finishing strong.
