Q3 Day 1 - Bullish

The first trading day of the third quarter is historically bullish. The Stock Trader's Almanac has this as down as 76.2% bullish on Dow and 81% bullish on SPX. Looking back over the last ten years the points to note are:

• Eight green closes and two red closes
• The two red closes were -3 (2010) and -12 (2004)
• The eight green closes were +3, +3, +4, +5, +8, +10, +16, +19
• The second day of Q3 leans bearish

I'm leaning bullish today and looking for a retest of the 1968 SPX high from last week. If strong primary resistance overhead is respected there is still headroom to run up as high as the SPX daily upper band, currently at 1972. SPX daily chart:

The TNX chart is still in the balance here. TNX has been trying to break down from the double top but there is no conviction break below double top support as yet, and as I have noted many times before, when these patterns fail it tends to be just under the break.  TNX 60min chart:

TRAN is close to a retest of the highs and I'm expecting to see that. As with SPX there's quite a bit of resistance in that area and the obvious next move is downwards, if that remains possible in this seemingly unstoppable bull run. TRAN daily chart:

Last year was one of the rare years when there was no retracement during the year that was big enough to retest either the SPX 200 DMA or the weekly lower band. I'm considering the possibility that this year we could see another even rarer year with a second consecutive failure to retrace significantly. If so I think I'm right in saying that the only other time that has ever happened was in 1928. I'll be checking to see if that's right. 

The stats lean strongly towards a green close today with some retracement tomorrow. A retest of the 1968 high with a probably marginal new high up to 1973ish would be the obvious intraday target for today. If we get that then we could see a significant decline tomorrow, but it would be rare to see a strong multi-day decline get going in a low volume holiday week.