The fact we held above the very important 2040 support line on the SP500 and rallied strongly since is very constructive on a technical basis.  But we still need to be cautious here as we still have the possibility to form a lower high and thereby have all the necessary elements of a trend reversal in place.  A close above 2126 would invalidate that reversal possibility (for now) so that becomes our key level to watch.

As we wait to see what actually develops for the second half of the month, we have the backdrop of poor seasonality patterns as a tailwind. As you can see below, July has tended to be the worst month for the US stock market with only 45% of past July’s closing higher than it opened.