Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Monday, September 13, 2010

One last hurdle

Click on above images to enlarge

As of today we have three of the four things we have needed to clear the way for an end of year bull run.  In the center chart cluster, row 1 chart 4, we have regained the uphill brown mother channel after hopping across the 108 EMA line.   Second, today we broke out of the congestion MA lines which are shown in the center cluster row 1 chart 3.  Third, the financials finally broke out of their summer downtrend channel as shown on the bottom chart.  The last thing needed is to break out of the horizontal summer trading range that goes from S&P 1040 to S&P 1125 as shown in the center cluster row 2 chart 2.  To make this horizontal blue line trading range we've been in more visible, I've added a less focused in chart in the middle cluster, row 2 chart 1, where you can clearly see the blue bands of this summer's trading range and how today's close got us up really close to it but we still must break out of the top of this sideways channel or all of the past 2 weeks means very little.

In the upper chart cluster, the 20 year bond reveresed today which is the smallest sell signal on the market.  This can be interpreted as the bond traders believing that the last obstacle to be cleared, the upper blue band of the trading range, will be what stops everything.  They may be right or they may be wrong, we will see, but one has to also remember that Bernanke is starting to buy treasuries again and this would sure be the right time so that a bond market sell off can be prevented if the stock market does completely break out.  One other thing, in the middle cluster row 1 chart 1, we see today's volume broke out of the 2 week declining volume downtrend.

The S&P closed at 1121 today and the final hurdle is at 1125.  Everyone will be watching to see what happens in the next couple of days.


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