The good news is that we are hearing any fanfare from this move up. If this move had been reversed and continued down 5% you would be hearing all the gloom and doomers talking about the sky falling. By not very many latching on to this past weeks move higher we have been given yet another indication of the importance pertaining to the low we have put into place.
The weekly chart has put in one, if not the most bullish candle pattern there is which should lead to a continuation of the bull market on a long term basis. This does not mean that we will not see a pull-back of sorts, but it indicates that these pull-backs should be used to add to equity positions.
This weekly chart will become even more bullish when the market continues its rally and the MACD lines at the bottom of the chart cross.
Remember also, that each time the equity markets, mainly the S&P 500 have reached their climactic bearish sentiment levels and then have sentiment turn back higher, the market has rallied 24% each time. I find it rather odd that this 24% is not an average, but each occurence with these specific conditions have rallied 24% from their lows before any decline of substance came about.
A 24% advance from our most recent lows on the S&P 500 puts the index exactly back at its all time highs, so we have a heads up that this is the very minimum we should expect.
By the way, 24% is certainly nothing to sneeze at, as it is better than 2 times the average return on equities.
On the short term front, the market has reached a juncture of sorts and a break either way is a possibiliy, although the probable outcome leans with a break down.
However, this market seems to have some heavy pent up buying pressure behind it so which way it breaks out of the wedge is a toss up.
The most important thing for short term traders is to jump on board the trend, whichever way it decides to move.