Based on the charts below for the S&P 500 we are due for more upside. Last week's post Is The Rally For Real? the S&P 500 did exactly what the charts said it would do, and this week will be a continuation of the rally in progress. This week, however, is a bit tricky. Overall, we are definitely going higher, but certain indicators are saying we might have a minor pullback to relieve overbought conditions, especially in Dow Jones. This post is not meant to cover what will happen in the next day or two but the next 7-9 trading days.
The weekly and 60 minute S&P 500 charts as well as the McCellan Oscillator are saying we will reach 1360 soon.
The S&P 500 weekly stock chart (shown below) show prices continuing upward after bouncing off the lower Bollinger Band a few weeks ago. The chart shows a target of 1360 (the middle Bollinger Band). The 61.8% Fibonacci retracement line of April's highs offered support for the S&P500, which tell us we were in a minor correction and the overall trend is still up.
The S&P 500 60 minute stock chart (shown below) is showing resistance at 1360, which is the next line of resistance, and also agrees with the middle Bollinger target on the S&P 500 weekly stock chart (funny how it works out). The daily S&P 500 stock chart (not shown in this post) is also bullish. On the daily S&P 500 chart, the upper Bollinger Band is not acting as resistance, but is pointing upward, giving way for the S&P500 to go higher. As Bollinger Bands offer support and resistance, and are often the biggest hint of an upcoming reversal, it isn't indicating one right now.
In short, the McCellan Oscillator measures the amount of money in the market, and when there is money in the market, prices can go higher. And the Oscillator is saying by being overbought is that there is enough liquidity to push prices higher. For those interested, the chart's annotations go into more detail.
The McCellan Oscillator has been giving off very bullish signals since the lows of two weeks ago when it gave positive divergence and not confirming the lower lowers of the $NYSE.
In short, the McCellan Oscillator measures the amount of money in the market, and when there is money in the market, prices can go higher. And the Oscillator is saying by being overbought is that there is enough liquidity to push prices higher. For those interested, the chart's annotations go into more detail.
If you enjoy the McCellan Oscilllator chart I have drawn, I update it weekly: McCellan Oscillator.
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