A Discounted View

Currently, the S&P 500 (SPX) is consolidating near its recent all-time highs. The index has not been at these levels since the end of February 2017. Since then SPX consolidated through time by around -3.00%. A pull back of this magnitude is perfectly normal for a market in an uptrend . In fact, the lack of damage done to the price trend during this decline could be seen as a sign of strength. That is, sellers are not aggressively offering prices lower but buyers are eagerly bidding into any countertrend move . Moreover, two weeks ago SPX gapped up two days in a row. During this move the price exhibited strength  as the gap up over both days absorbed a meaningful amount of the pull back in only two days. Additionally, the upper boundary of the SPX’s Bollinger Bands was penetrated by closing price both days. When price penetrates a Bollinger Band it is often a precursor to an extended trend in the direction of the penetration. No indicator works all the time. However