How to play Apple shares and big bank earnings as the stock market hits another record

The S&P 500 has continued its ascent to new all-time highs, with technical indicators showing the index is overbought, trading above its +4σ modified Bollinger band. Despite this, the current condition is explicitly stated as not an immediate sell signal, and the upside breakout is considered stronger than previous rallies. Key support levels are identified at 6,060, 6,020, and 5,920, with a move below 5,920 considered bearish, though not anticipated soon, suggesting continued market strength despite extended valuations.

Analysis

The S&P 500 index (SPX) is exhibiting significant bullish momentum, having registered new all-time highs. Technical analysis indicates the market is in an "overbought" state, with the SPX trading above its +4σ modified Bollinger Band. However, the author explicitly states this condition is not an immediate sell signal, suggesting underlying strength supports the current levels. The present upside breakout is viewed as having stronger market internals compared to the false breakouts observed in February. Key support levels are identified at 6,060 and 6,020, with a more critical bearish trigger established at 5,920, a level that is not expected to be breached in the near term. While a close below the +3σ band would generate a "classic" sell signal, these are noted as being unreliable and prone to whipsaws. A more definitive McMillan Volatility Band (MVB) sell signal could potentially follow, but its occurrence is not guaranteed.

Key Decisions for Investors

• Investors should refrain from selling or initiating short positions based solely on the current overbought condition, as the analysis suggests the market's internal strength may sustain the rally.
• It is crucial to monitor the key support level at 5,920, as a break below this threshold would constitute a significant bearish signal and warrant a defensive portfolio adjustment.
• Traders should watch for a close below the +3σ modified Bollinger Band as a preliminary warning, but avoid acting on it impulsively due to its noted unreliability, while remaining alert for any subsequent increase in downside momentum that could trigger a more reliable sell signal.