The S&P 500 continues with a secondary correction that is likely to test the long-term rising trendline and support at 2400. Bearish divergence on Twiggs Money Flow warns of selling pressure but this seems secondary in nature.
Target 2400 + ( 2400 – 2300 ) = 2500
Twiggs Volatility (21-day), at 0.63% for the S&P 500, is way below the 1.5% warning level for elevated market risk.
The yield curve is flattening, with the 10-year minus 3-month Treasury Yield Differential close to 1.0%. But this is still well above the 0.5% early-warning level. A negative yield curve, where the Yield Differential falls below zero, is normally followed by a recession within 6 to 12 months.
Fed monetary policy remains accommodative, with currency in circulation expanding at a healthy annual rate of 6.9%.
The bull market remains on track for further gains.