Stock Market Technical Analysis Blog
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Following up from Thursday's blog where I discussed the layup bounce they are constructing in the top chart above, we saw that Friday's sell down completed the compression of the two large moving averages and now they are ready to work the market lift. Over the next few trading days we will need to see a series of up days mixed with flat days to keep the orange line parallel to the brown and gradually start lifting for a repeat of the early July lift that can also be seen in the top chart.
The key item as of Friday's trading, however, is in the VIX where it successfully completed a hard test of the blue 432 EMA line which is the key pivot/reversal point for the stock market as I have discussed several times over the past couple of years. Considering that the 432 held, the bulls should take control tomorrow. Also, the third overriding factor is that tomorrow is the first day of the new trading season where Wall Street starts fresh with a new agenda giving us a clear up move or down as I also discussed in Thursday's blog.
With an ideal layup structure being constructed in the top chart and also, the VIX having held its 432 EMA line Friday, the odds are in favor of Wall Street's first direction move to be upward and which could take the market back to the 8/2 peak during this new month.
I realize there are serious external factors hanging over the market which I discussed in detail last week but nonetheless, Friday's afternoon close should be the bottom of the correction and we will likely open tomorrow with a big gap up.
Trade well my friends
Alan
