The Market Trend Model (http://bitly.com/M_Trend_Model) moved to a more neutral bias this week as the stock market indexes continue to zig zag around the recent May breakout levels. On Friday the S&P 500 moved to a negative bias as this index once again closed below its May breakout level with expanding volume. In this age of central bank currency wars and interest rate manipulation it remains to be seen if the sellers can power the market downward or if the weakness seen on Friday simply evaporates as it has so many times before.
Friday's negative tone for the stock market was set by the revised Q1 GDP report (http://ow.ly/NE9o4) which shows the U.S. economy in contraction with a -0.7% reading. At first this may seem to be a negative development, but remember the stock market is a forward looking instrument. A one day reaction to backward looking data is just that - a one day reaction. Should the prevailing opinion be correct that Q1 economic weakness was due to the severe East Coast winter and the West Coast port work slow down, then one would expect the economy to rebound sharply going forward.
Additionally, despite the constant drum beat of financial commentary that suggests the Federal Reserve will begin to raise interest rates this year, it appears very unlikely Janet Yellen will do anything to curtail central bank "easy money" policy in the face of a negative GDP reading.
Technically speaking the Nasdaq and the Nasdaq-100 remain in firm up trends. Meanwhile the S&P 500 and the Russell 2000 are weak in their respective daily time frames, but both of these indexes appear to be consolidating in what is a continued uptrend in the longer weekly and monthly time frames.
In my opinion, despite recent weakness in the stock market indexes, it is likely too early to call a market top until further evidence is presented.