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 [1] 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 [2]
The wide trading ranges are still intact [3] 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 [4]
Follow TheStockBandit on Twitter [5] or Facebook [6] to keep up!