S & P Trend Upgraded To Uptrend
Good wishes my associate stock trading fighters. We may well be at the start of a new strong bull run.
I'm sorry?
What MaryJane am I smoking to say that with unemployment so high, banks being closed down, and housing construction taking a double dip to the downside?
Fantastic question. It does seem out of the question if you are a one-dimensional being living in the present.
On the contrary you are greater than that. You were created the capability to imagine yourself existing in the future. That higher level of thinking is something that makes you unique from other beasts and micro-organisms that can just reason in the here and now. While I confess it's not as awesome as The Hitchhiker's Guide To The Galaxy time travel, it can make you a great deal of cash.
One of the most difficult lessons for rookie stock traders to seize is that the stock market is the future of the economy somewhere from 4 to 8 months. In other terms, all the price action taking place on the stock market today is a lay a wager on where we imagine the economy will be 9 months from now. The stock market is yelling at us that in 9 months from the present, the unemployment rate will be lower, banks will no longer be failing, and home construction will go back up. The earnings season that just ended confirmed that with 71% of all companies posting earnings increases YOY.
Last weekend I wrote on the subject of how, with the downtrend channel breakout, we do not know what new channel or pattern will appear since we do not have enough data so far. Currently with 1 week more of chart data, and zooming out on the stock chart to see the bigger chart pattern, a model emerges.
The S&P 500 has accomplished a Bullish Flag breakout.
Now short sellers and gold bugs will bicker about the Bullish Flag breakout and say that not enough volume exists for this to be a valid breakout but this is just not accurate. If you travel back in time and study the previous Bullish Flag breakout we had on the S&P 500, you can observe that the volume that has accompanied this breakout is over 23% greater!
The Bullish Flag did a textbook 38.2% Fibonacci retracement of the bull run that started in March of 2009. A 38.2% retracement is a great retracement for a bull run.
I am upgrading the S&P 500, Nasdaq, and Dow to that of uptrend.
Article Source: FxTradingStock.com
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Free expert chart analysis to assist you in establishing the direction of the Dow, Nasdaq, and S&P 500. Go to s & p trend
by: Steve Cody
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Word Count: 434
Date: Tue, 27 Jul 2010
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