I ran into problems generating charts this AM, sorry for the lateness..
Last Friday's price action and the action for the week was very bullish and sets us up for another leg in this market. The 4% price action on the value line put the 4% Zweig/David system back into the market on the long side and this trading system has a very good track record. Around the world the markets are joining into this rally.
Asia
Europe
United States
Economic news
None
Earnings
Breadth Charts
40 DMA % Index
This chart remains incredibly bullish. The yellow trendline on the RUT is where I had expected the index to start to curl on the Russell but as you can see it has just sliced through there. We will continue to look for weakness to creep in but it isn't there yet. This chart scores a +6
10 Day High - Low
This chart is getting stretched and should flatten out. The Naz chart would not generate but we will assume it also scores a +2 today so this chart scores a +6..
52 Week New Highs
52 Week highs regained their momentum with Friday's action and this chart scores a positive +6.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High - Low | +6 |
| 52 Week New Highs | +6 |
| Total | +18 |
$SPX
Friday's action widened the support and resistance lines as the price broke above that 1125 line and shot up to the 1130 area and then trending up from there. The 1140 area is the next level of resistance then 1146 before hitting a new rally high above the 1150 area. Support will most likely be tested at 1135 then 1132 and 1130 at some point. I expect this morning that we will rally at some point as there are still plenty of shorts that did not believe Friday's action and shut there screens off and went home for the weekend waiting for reality to return to the markets. A rally today will bring them in as buyers.
One thing to remember here as we hit the anniversary of the bottom is that long term capital gains start kicking in. For those with the foresight of holding for the last 12 months, first of all congratulations and second of all you might see some selling to re-enter type of behavior. The longer we move into this calendar the more that pool of LTCers with grow.
The market remains under the control of the bulls right now as the bears made no progress last week. To gain real respect today a complete retracement of Friday's action is in order here, that means closing the 1125 gap and closing in that area.
The bulls simply have to close above yesterday here above 1140 today. An NR7 day would be expectable here but after 3 in a row last week some upward progress would be more convincing of the bulls fortitude.
There is no gap this morning so we will get an "honest" open and see if the market still has a desire to flow upward.
Hope to see you in the markets
RLT - aka Marlin
