Weekend Report for Monday, May 19, 2025

Weekend Report for Monday, May 19, 2025

Bottom Line:

The bull trend is intact. I’m not sure if this is a bull market, but it is most certainly a bull trend.

This has been/is a ferocious rally. It has been unrelenting with very shallow and short-lived retracements.

Some technicals are at extremes. The SPX NDX and NYA have exceeded critical upper KRAs. The DOW, RUT and RSP are below their respective critical upper KRAs (the RUT is very near its upper KRA.

The cumulative NYSE A/D line is at all-time highs and this strongly implies any retracement will be temporary and lead to more all-time highs. By the way, this is evidence the indices are indeed in a bull market.

The “extremes” we see in the technicals do not necessarily suggest a large degree top is imminent. What would be typical now is for the uptrend to go into grind mode with daily ranges narrowing. Intraday trade is likely to be consistently heavily rotational.

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SPX

Upper KRA: 6147
Lower KRAs: 5861; 5785

Note the 10-day ATR is in a “crash”, but it can easily go a lot lower. It is very likely that if the market continues to go higher without any significant retracement that the daily ranges will continue to narrow and the advance will increasingly become a slow grind.

SPX Profile

Below is a profile view of the SPX. Each profile unit is one calendar quarter; each slot, or letter, is one week. It provides an intermediate term perspective of the auction process. The profile perspective can be incredibly useful in identifying the market condition of a given timeframe. The Auction Market Process of development is consistent and immutable across all time frames.

The profile graph is not predictive, per se, but at times it can help significantly with the probabilities of what a market may do. I believe the profile graph of the SPX in this intermediate term perspective is in that position now.

The current intermediate term auction has traded into the HVN (High Volume Node) of the previous same time frame auction. This alone wouldn’t be nearly as significant if it were not coupled with the current auction being so clearly extended.

The SPX could certainly become even more extended, but based on this perspective I will not be pressing the long side of this market except for very special intraday situations.

Below is the SPX following the covid crash low and subsequent upside explosion. Note that in spite of the rally coming off of one of the most compressed down markets in history, price very quickly truncated into heavy rotation.

RSP

Upper KRA: 181-183.50
Lower KRAs: 175; 172

NDX:

Upper KRA: 22240
Lower KRAs: 21150; 20623

DOW:

Upper KRA: 42530-42827
Lower KRAs: 41751; 41239

RUT

Upper KRA: 2110
Lower KRAs: 2067; 2042

New York Composite

Upper KRA: 20332
Lower KRAs: 19579; 19315

VIX is at its lowest level since March. It can certainly drop further, and it will if the indices continue to grind higher. VIX is a reflection of volatility and volatility equates generally to range. A low VIX is evidence of narrowing daily ranges.

NYSE Data – Internals

10-day and 5-day MAs of NYSE advancing issues have rolled over and are diverging against higher highs in price. As I constantly remind, this can continue for long periods.