We have lift 5/26/11

Stock Market Technical Analysis

The markets put in a modest gain today.  It began the moment the VIX slipped through its blue bull/bear line in row 2. This gave the SPY a decent candle in the upper right chart today as it lifted up from the lower line of its long term brown channel. ( I thickened the lines of this brown line channel and converted the black channel to thin lines as the brown channel now becomes the primary channel)  I suspect a lot of traders opened swing trades to the upside today. If so they must be closely monitored.
The real test of market direction will happen when the SPY gets up to the the 3 month orange shelf line. If it can't get above it then this is all just buying time.( also it must cross back up into the black line channel at the same time, this won't be easy)
The VIX, in row 2 has its own big test coming - the 16 level, where I have a thin black line drawn. The chart shows how it has turned up from there a couple times recently, and we are right down to it with today's close.
The UUP is also going to be put to a test tomorrow as it is right down to its blue bull/bear line where it could easily bounce back up from it instead of crossing down through.
Day by day market continues..

Alan