Friday Weekly Charts

There are a few observations that occur to me when looking at today’s chart: for one, my observation last Friday that we were not going higher for the rest of the month, due to pivot point resistance, was off by one day. Today’s break of that resistance occurred on high volume, which means we are probably due for a pretty good bull move here. Today also constitutes a follow through day; unlike the last one, there is no question about this one, meaning failure is less likely. The last move down, as it stands now, was the fake out move that I was expecting: unfortunately it still succeeded in shaking me out. And finally, when the big money starts moving, as it did just before the close yesterday, pay attention. As we found out this morning, they knew something the rest of us did not.

Today’s move put us in the upper half of the weekly chart range, broke back above the 10 week average, and stopped the momentum indicators from faltering, restoring a strong upward momentum. We are due for a bull move here, quite possibly as high as this year’s high or higher.This may be the wave 5 I expected back in April but did not get.

 The Nasdaq is sill lagging and is still in the lower half of the range, but has about the same momentum going up.It still has to get through the 10 week average, but if the rest of the market continues moving up, that will not be a problem.

The Dow industrials appear to have slightly less upward momentum, which is bullish, as the market becomes less defensive.  It appears from here that it will be pretty trivial to get back to the 2012 high.

 The Dow transports are a little problematical: the 2012 high was lower than the 2011 high, putting them in what could be considered a bear market, and also putting stronger resistance above where it is now. However, it is moving up, and is now showing some pretty decent strength. 

The Russell 2000 is even a bigger problem: it has the same situation as the transports, but has more of a tendency to lead the market. If this has another failure to get to a new high, then that would confirm that we have been in essentially what is a bear market since April of 2011: get to a new high, and it’s a whole new ball game.

We are back in rally mode, as once again intervention saved the day. We may be in for one hell of a rally in July.

I will have the new highs update shortly.