So far the early weakness in the SPY has not amounted to much other than a minor pullback, and certainly has not inflicted any meaningful damage to the chart structure. In fact, while the Qs (Nasdaq indices) declined to test and to marginally break Tuesdayââ,¬â"¢s pivot low, letââ,¬â"¢s notice that the SPY has exhibited considerably more relative strength ââ,¬â€œ and have pressed only to a 139.40 print, which is nearly 1% from testing Tuesdayââ,¬â"¢s low.

To inflict initial damage to what looks like another high-level congestion period within the still viable July-November bull trend, the SPY must break near-term trendline support, currently at 139.04, and only then will we have reason to suspect that a test of Tuedayââ,¬â"¢s low at 138.10 is likely. Otherwise, the SPY remains in a very healthy technical posture, dissipating its 3-session overbought condition ahead of the next upleg projected to 141.50/70.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.