S&P 500 - July 24, 2010

An acceptable close to an acceptable week!

This is a weekly chart


Index managed to close above my weekly MAs and above the actionary purple line. Weekly volume expanded on the way up this week. This was quite an acceptable effort from the bulls, but they need to do more. At the very least, they should end the coming week above the MAs. They should also force a MACD cross which would be a nice positive given that RSI finally moved above 50.

This is a daily chart



Interesting how we get cliffhanger daily closes. Wednesday closed at 1090 (an OEW pivot). Thursday closed at 55 EMA. Friday closed at 1100 and 144 EMA. Index is now above the overly famed and ballyhooed 200 SMA. Does that mean we are back in a bull market while 4 days ago we were in a bear market? I don’t know, and, as many longtime readers know, I don’t care. A market is either trending or not. Animal designations mean little. We are at the verge of getting an uptrend in terms of highs and lows. We are very close to confirm an OEW uptrend as well. Even if we get our uptrends, there is no guarantee that we will match or better the April high – one level at a time as I monitor, adjust and adapt

Bulls need to get past this hurdle (1100-1110) and, while they are trying for it, they need to hold 1083-1090 on any setbacks. I will be concerned being long if index drops below 1070-1075.

Breadth has been slowly, but steadily improving


There is a short term buy signal from Bullish Percent Index. There has been noticeable improvement in percent of stocks above the widely watched 50 and 200 SMAs. A/D line made a higher high.

We had a steady set of good up volumes, and a steady rise to number of net new highs.


McClellan group of oscillators look good as well


So, we have a uniform picture of breadth that looks good at the moment. Does it mean that things cannot drop all of a sudden? Absolutely not. Does it mean that we won’t have pullbacks? Not at all.

It just means what I said: the picture is good at the moment. Market is against an area of technical resistance. Bulls have the wind in their sails and they can go for the kill early next week, ram it through 1100 and 1110 and you may get the shorts feeling the heat on their backs; dilly dally and you may embolden the bears shorting on a failed test of resistance.

I decided to play a little with regression channels


Notice that price is hitting against the second band of the longer term grey channel. Also notice that the top of the short term orange channel coincides with a couple of VWAP curves I have launched from the Feb low and the April high.

Then I decided to widen my longer term channel to fit the flash-crash-fat-finger low


Now the inner line of the grey channel is holding the price while the outer line is coinciding with June’s high.

It’s neat, isn’t it?

Anyhow, most studies are based on price and often paint the same larger picture.

This is a 60-min chart


The chart just looks good. It has resistance ahead, but it has built some momentum that may carry it through. I wouldn’t get caught in the minutiae of the intraday waves, there are quite a few different ways this can be counted. I would instead pay attention to what price interaction with my levels and MAs. Notice what a good long trade the index gave by testing the top of the July 22 gap.

I would be concerned and disappointed if bulls fail to hold 1070-1075. But before those levels, I expect the bulls to stay above 1080. They have everything working for them now. There can be no excuse, and I shall have no patience for lack of performance – they just need to get on with it and do the jobs.

I don’t think we have yet seen shorts being seriously pressured by the bulls. There are multiple levels of resistance that might have helped convince the bears to hang in. If bulls ram through these levels without much of a hiccup, we may get a spectacular couple of days burning shorts.

It’s up to the bulls to press it!

OEW pivot support is at 1090 and 1058. Pivot resistance at 1107 and 1136.

Long term trend is up. Mid-term trend is down. Short term trend is up.

Enjoy the Rest of Your Weekend!