There were so many bullish technical events yesterday that we’re not sure where to start, but we’ll try anyway. For starters, the S&P500 closed above the all important 200 day simple moving average. The U.S. dollar closed at its lowest level of the month and below its 50 day sma, conversely, the Euro closed at its highest level of the month and above its 50 day sma. XLF closed back above the key $13.50 level. The Russell 2000 and the Midcap 400 closed above psychologically important levels themselves, 750 and 900, respectively. And finally, the VIX closed below the 30 level and is at its lowest level of the month.
All of these technical occurrences have gone along way in confirming the bounce off last weeks lows. We remind you that those lows coincided with previous areas of resistance and they successfully acted as support on the pullback last week. The bulls really couldn’t ask for anything more. The key now is for SPX to sustain multiple closes above the 200 day sma and begin to extend away from it to the upside. If it fails to do so, it may entice alot of shorts to jump in here. Not to mention there are likely still alot of non-believers on the sidelines waiting for further confirmation of the rally. A sustained rally above the 200 day could serve as that confirmation signal.
So what should you be watching for next? Well the case can be made that the U.S. dollar is still in a tactical base break out if it shows the ability to remain above the $75.50-$76 range (its 200 day sma also resides at $75.73). The same can be said for the VIX as it is still above its most recent lows and its 200 day sma (currently at 24.07). Also, the Dow Transportation average is still below its 200 day sma. A close above 5,013 on $TRAN could go a long way in luring more would be bulls off the sidelines. This weeks lows on all major market indexes will now serve as key support and a move that breaches them warrants caution.
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Related posts:
- SH @ the bell 9/29/2011: Markets will have lots to chew on
- SH @ the bell 10/11/2011: Rally can be nitpicked, but overall bullish trend in play
- SH @ the close 10/10/2011: Market surges higher on bullish technicals
- SH @ the close 10/27/2011: Bullish breakouts everywhere; SPX rockets
- SH @ the bell 12/8/2011: Watch yields closely in relation to the markets
