Market Update: It continues to look like a healthy correction

Last Thursday I wrote, "the S&P 500 could be carving out a trading range within 1600 and 1640. It is premature, admittedly, but early indications are 1600 is fairly firm support and 1640 looks to be the new resistance area."

Based on the hourly chart below, it certainly appears as if 1600-1640 has become the trading range for the S&P 500:

 Source: Finviz.com

Note that this correction continues to look healthy. The chart above depicts a double-bottom ("W") formation, typically a bullish occurrence.

Stepping back further, the S&P 500 daily chart also continues to look bullish:

Source: Stockcharts.com

As it has in the recent past, the 50-day moving average (blue line) appears to be firm support. Note the recent bullish breakout through the declining trend line. Also, both the MACD histogram and stochastic are rising off oversold levels and it's good to see the MACD lines have stayed above the zero threshold (bullish). Finally, the RSI has remained at or close to 50 during this correction, inferring positive momentum remains intact and no severe or lasting technical damage has occurred with this decline -- another bullish indication.

As I've been writing, so far so good regarding this correction....