S & P Trend

Respect my associate stock trading fighters. We may well be at the onset of a new big bull rally.

Come again?

What MaryJane am I smoking to say that with so many people being without a job, banks being closed down, and house building taking a double douse to the downside?

Meaningful question. It does look impossible provided you are a one-dimensional organism living in the here and now.

On the contrary you are better than that. You were created the capability to envision yourself existing in the future. That higher level of thinking is what makes you different from other animals and living organisms that can only reason in the present. Although I confess it’s not as powerful as The Hitchhiker’s Guide To The Galaxy time travel, it can make you a ton of dinero.

One of the most tricky lessons for rookie traders to snatch is that the stock market is the future of the economic cycle somewhere from 3 to 9 months. In other terms, all the price action occurring on the stock market today is a gambit on the place we believe the economy will be 9 months from the present. The stock market is saying to us that in 9 months from the present, the jobless rate will be lower, banks will no longer be failing, and home construction will go back up. The earnings season that just ended confirmed that with 70% of all companies posting earnings increases year over year.

Last week I talked on the subject of how, with the downtrend channel breakout, we don’t know what new channel or pattern will appear as we don’t have sufficient chart data thus far. At this time with 1 week more of data, and zooming out on the chart to see the bigger pattern, a configuration emerges.

The S&P 500 has accomplished a Bullish Flag breakout.

Now sellers and gold insects will bicker about the pattern and proclaim that not enough volume is there for this to be a valid breakout but that is just not true. Provided you go back and study the previous Bullish Flag breakout we had on the S&P 500, you will observe that the volume that has accompanied this breakout is over 23% more!

The Bullish Flag was a perfect 38.2% Fibonacci retracement of the bull move that started in March of 2009. A 38.2% retracement is a common retracement for a bull run.

I am upgrading the Dow, Nasdaq, and S&P 500 to that of uptrend.

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