Okay, the S&P has gone higher than I anticipated. I still can't believe that we are entering a new bull market rally given the fundamental problems that have come to pass (credit crisis) AND the manner in which the current administration and the Fed are dealing with these problems (spending trillions of borrowed money). But, I don't trade fundamentals so lets look at the technical picture.
We are approaching the 61.8% retracement level of the current bear market decline. I think a lot of traders will be watching this level. We just made it above the declining 200 dma (not shown) and the higher we get above the 200 dma is getting the old rubber band pretty stretched without a pullback.
Take a look at the second chart, here we are looking at bollinger bands and the 20 month moving average. Notice that the direction of the 20 mma has significance and identifies the overall trend. It also tends to offer support during bull runs and resistance during bear markets. The direction now is down. It appears that the s&p is on a collision course with the 20 mma. Will the s&p stall just short at the 61.8% retracement level? I don't know, but I'm still not convinced that we are in a bull market yet. I am trading on the long side in shorter time frames. Commodities are offering opportunities but are currently overbought. I am stalking pullbacks. Good luck!!!
