Salutations my buddy stock trading warriors. We could be at the birth of a new major bull rally.
Pardon?
How can that be with unemployment so high, banks being closed down, and home construction taking a double dip to the downside?
Great question. It does appear impossible if you are a one-dimensional creature living in the here and now.
However you are greater than that. You were given the capacity to envision yourself existing in the future. This higher level of thinking is what makes you unique from other beasts and living organisms that can only live in the present. Though I admit it is not as fantastic as Back To The Future time travel, it is capable of making you a huge amount of moolah.
One of the most difficult lessons for newbie traders to grasp is that the stock market is the future of the economic cycle anywhere from 4 to 8 months. In other terminology, all the price action taking place on the stock market right now is a bet on where we believe the economy will be 9 months from the present. The stock market is yelling at us that in 9 months from the present, the jobless rate will be lower, banks will no longer be failing, and home construction will strengthen. The earnings season we just finished verified that with 70% of all corporations posting earnings increases YOY.
Last weekend I talked about how, with the downtrend channel breakout, we don’t know what new channel or formation will form because we do not have enough data yet. Currently with 1 week more of data, and zooming out on the stock chart to look at the larger trend, a archetype springs forth.
The S&P 500 has accomplished a Bullish Flag breakout.
Now bears and gold bugs will dispute the formation and say that not enough volume exists for this to be a legitimate breakout but that is just not true. Provided you travel back in time and study the preceding Bullish Flag breakout we had on the S&P 500, you will see that the volume that has accompanied this breakout is over 23% more!
The Bullish Flag did a picture perfect 38.2% Fibonacci retracement of the bull move that started in March of 2009. A 38.2% retracement is a typical retracement for a uptrend.
I am upgrading the S&P 500, Nasdaq, and Dow to that of uptrend.
Free technical analysis to aid you in figuring out the trend of the major indices. Go to s & p trend
Tags: business, investing, s p trend, stock chart, stock market, technical analysis