Twelve days ago, I warned you not to chase the stock market rally.

Despite the Volatility Index (VIX) buy signal, stocks had rallied too far, too fast. Investor sentiment was overly optimistic. And it looked to me like the market was setting up for a quick pullback.

Well… it hasn’t been quick. And it hasn’t been much of a pullback.

The S&P 500 closed yesterday at 2774. That’s almost exactly where it was trading 12 days ago.

What we’ve just experienced is a time correction, not a price correction.

Rather than reversing course and declining to test the support of its various moving averages, the S&P 500 has been marking time. It’s been hovering near the 2770 level for the past several days, and giving the various moving averages time to rise up towards the current price of the index.

This is bullish action.

Buyers are willing to step up and buy stocks on every modest decline. So the drops are shallow. Meanwhile, the moving averages – which are the support levels for the index – have had time to rally up towards the current price of the S&P 500. Take a look…

The index was 40 points above the 9-day exponential moving average (EMA) 12 days ago. Over that timeframe, though, the 9-day EMA has rallied up to the current price of the S&P 500. Now it’s providing support on every selloff.

The 20-day EMA is just below, at 2753.

Based on this setup, I really don’t see the market selling off much more before it runs away to the upside for one final bull market rally.

I would have preferred to have seen a selloff towards the 50-day moving average line at about 2705 to set up a good buying opportunity. At the very least, I was hoping for a decline to the 20-day EMA.

But the stock market is resilient.

Despite selling off sharply on the opening on Friday, and on the opening yesterday, the S&P 500 closed yesterday near 2774 – which is where it was 12 days ago.

It hasn’t sold off at all. Instead, stocks have been chopping back and forth and chewing up traders on both sides of the market.

This sort of action makes it hard to be bearish.

It’s hard to be bullish, too. But as long as the S&P 500 is trading above its 50-day MA, the bulls get the benefit of the doubt.

Traders should take advantage of any declines this week – especially declines that knock the S&P 500 down to its 20-day EMA – as a chance to go long.

That’s where I’ll be buying.

Best regards and good trading,

Jeff Clark

P.S. As market conditions change, so does our Delta Report strategy…

It’s one of many reasons why my readers are always set up to profit, no matter which way the market turns. But the biggest reason (which I revealed, in part, with today’s essay) is a bit more technical. To learn more about it, and how you can benefit, click here.

Reader Mailbag

Quick note – many Market Minute readers have been writing in recently, asking more about Jeff’s essay on D-Day. So, we’ve made it available for anyone to read, for free, right here.

And now, onto today’s mailbag. First, a response to yesterday’s essay on gold…

All of your chart prognostications are nonsense, as long as people with deep pockets (banks) are messing with gold prices. The gold price is totally unpredictable! I predict that nothing much will happen until there is a major crash of some sort where the powers that be are overwhelmed by retail buyers. I am slowly accumulating gold and silver against the day when that happens. These are not short-term trades.

– Don

And some kind words on Jeff’s Delta Report trading approach…

Jeff, I was right about you! A true gentleman who stands out and towers amongst gentlemen. You give option advice in your Delta service as if you do so to your own mother! I would hug you like my own brother if I was in the U.S., not across the Atlantic. Who does that in this day and age? Bless you.

– Sonia

Thank you, as always, for your thoughtful insights and constructive feedback. Keep it coming.