to follow up on my technical analysis post from last night, we made good progress today.
As stated previously all the indexes gapped over the shorter term moving averages and closed above them end of day which is short term bullish. There was an intense battle going on in the morning as the price was bouncing below and above the averages non stop, but eventually we stayed above and held the position.
Another important short term hurdle was somewhat accomplished by passing the previous ‘lower high’ made on 9/8/2011 (see chart from last night’s post below). We actually from made a new high over this lower high by a few pennies on the Nasdaq and Russell 2000, but the sp-500 was not able to accomplish this (fell short by a few pennies) before reversing. The market reversed in the last hour of trading and ended up not being able to close above this lower high, but this is still a short term bullish move.
We also broke the declining trendline that I mention in last night’s post as well … another bullish tone.
I actually used the highs of the day today to take some profit off the table as I expected we would hit this target and fall for a day or two.
We have removed 3 of the concerns I mentioned last night, but ultimately we need to make a higher high from the previous high made on 8/31/2011 in order for my opinion of the market to become bullish in the intermediate term.
We made a nice step in that direction today, and if we have confirmation with a strong day tomorrow I will feel much stronger again about this market. It wouldn’t surprise me though if tomorrow and a few days after that we see some downside revisited or some churning sideways in order for the market to have a little time to absorb the move today. Remember after such a massive decline, a slow rise is more healthy in the long run vs. a quick bounce back. We want long term investors comfortable in this market, and a quick bounce will keep them jittery.
Have a great evening.