Positive Signs

• Posted by Robert Sinn
• on July 17th, 2012

Quite simply there are a lot of positive signs out there for equity bulls. Last Thursday morning if one were to have scripted a bullish scenario for how the next four trading sessions would play out I don’t think anyone could have come up with a better sequence of events than that which we have experienced: Hammer reversal on Thursday, powerful broad based rally on Friday, low volume pause/pullback on Monday, wide range with early weakness giving way to late strength and a close at session highs today.

Without getting too granular I believe that the following three charts nicely summarize the current market situation:

 

I’ve noticed a lot of people trying to make the case for a rising wedge in the S&P 500 ($SPY, $SPX), however, I simply see it as an uptrending channel with the July 3rd high at 1375 as the next key upside target.

 

Treasuries ($TLT, $ZB_F) may have just made an important double top with plenty of bearish divergences helping to strengthen the case for near term downside.

And perhaps the most important chart of them all, the US Dollar Index ($DX_F $UUP), experienced a major whipsaw during today’s session as it closed on its low:

During the last week the Dollar Index has made a series of lower highs and lower lows since forming a tweezer top on July 12th. Remember last weekend’s Barron’s cover?…….

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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