This is the second day in a row that SPX closed above its 6 SMA. The volume increased again today. The breadth was negative all day, but the market refused to go down. Lets zoom in to the SPY 60 minute chart.
SPY dropped below the lower trend line twice today, but came roaring back each time. The volume pattern is still showing big green bars dominant which should be bullish. The trend lines have come together now so it should be ready to go. There is a possible inverse head and shoulder pattern forming since the start of the year. Breaking the neck line to the upside should target new highs. This is a rather shallow pullback so far, but that is nothing new for this market. Here is the latest stocks versus their MAs chart.
While the market pulled back a bit since the start of the year the number of stocks above their 50 SMA has actually increased. Some bargain hunters are moving into lagging stocks. What an idea.
Maybe there are still a few people not chasing momentum stocks.
I am sure most everybody knows about the Jan. barometer. The old saying that as Jan. goes so goes the year. There is also the first five days of Jan. barometer. It has a pretty high correlation to how the month goes. The first five days this year were down. Even though the market looks set to rally it is possible it turns out to be a last gasp move. Keep in mind SPX has not touched its 200 DMA since Nov. 2012. It is overdue to say the least.
Bob
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