July 19, 2011 at 1:13 pm | | Comments 4

Upside Resolution

The 7-bar pullback off the July 7th high has been a pretty methodical one, despite some wide-ranging bars and overnight gaps.  Nonetheless, the pace of the pullback has been well-defined by the upper descending trend line, while the lower descending trend line has marked support.

Monday’s test of the lower trend line resulted in a temporary breach, but the S&P 500 recovered enough to reclaim that level by the closing bell.  Not only did that erase a chunk of losses from earlier in the day, but it gave a bit of an exhaustion appearance on the daily chart.

Today we’re seeing widespread strength with a solid thrust back up through the upper trend line.  This is marking a multi-day high, at least for now making it an upside resolution to the large bull pennant pattern which had been building.

Going forward, holding this breakout on a closing basis and seeing the bulls follow through on this advance will be key to making it stick.  If it does, we’ve got ourselves a higher low on the daily chart, and recent highs could quite easy come into view soon.

Here’s a closer look at the S&P 500 daily chart:


Chart courtesy of TeleChart

The wide trading ranges are still intact for now, but a continuation of the summer rally which started at the end of June is certainly a bullish technical event.  I’m currently long and eyeing more setups.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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  1. Good observation. I knew we were turning this morning when every single stock in ALL my watch lists, including shorts, was green.

    I covered all my shorts quickly, except for RIMM, and went long energy.

    Did the banks participate today, just got back in, did not check yet.

  2. Banks were mixed…BAC & GS down on a DJIA +202 day, so they are still suffering.

  3. Fo sho.

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  1. From Just What the Bulls Need | on Jul 20, 2011

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