As we've been reporting, we have been waiting for one of our favorite trend/breadth confirm signals to flash a buy. And while it is still VERY early, it looks like the signal will be given today. The breadth portion of the signal was triggerd on Friday and today's move "should" trigger the price side.
In addition, we like the action in the S&P 500 as it has now broken thru its 25 dma (see below) and the near-term resistance in rather decisive fashion. And while there is loads of resistance overhead, if the action remains constructing and barring a disastrous move down later today (is that enough hedging for you?), we would be buyers of any dip back to 900 as "old resistance becomes new support."
Also of note, one of our FAVORITE LONG-TERM BUY SIGNALS HAS GONE GREEN! In short, the market has provided at 10-day breadth-surge buy signal. This means that if history holds true, we can look for positive returns over both the near-term and long-term (assuming, of course, that the signal is not reversed - fingers crossed!).
Now toss in the favorable point we find ourselves on the calendar and we remain "constructive" on the market here. Oh, and did we mention the head-and-shoulders bottom formation that is playing out on the Dow and S&P?
But - and this is a BIG BUT - IF the market charges higher over the next few days without a pullback, this would indicate to us that this is most likely another in series of "bear rallies" and we would want to fade the move. So, in sum, the environment has improved, but we are not calling this the start of a new bull market.
