The Bull Awakens
by, 05-29-2016 at 04:06 PM (1245 Views)
Last week, I posted a chart of the NYSE and I said that price was likely to find support between the 2 lines I drew on the chart. I also said that there was a large, weekly doji that showed how much of a battle there was between the bulls and the bears; a battle the bulls won 2 weeks ago, but they had to lift the NYSE off a deep low. That low was about in the middle of my support area. I cautioned that price was fighting to stay above the 50 dma, but that overall I was leaning bullish for the coming week (which was last week).
I talked about the mixed picture being painted by the NYSE and Nasdaq, but that my intermediate term system was showing signs that a bottom might be near.
I closed last week's blog with the following statement:
"There is still a battle going on over the direction of price, but if you're bearish, be careful. The potential for a significant move to the upside is building."
I didn't lay all of my cards on the table last week because this blog isn't meant to be a detailed analysis. But I had reasons to be bullish. As you can see from the updated chart of the NYSE, a significant move to the upside occurred. Price is not far from testing that double top now.
Will it happen next week? Will the double top get tested? Will there be a breakout or is resistance likely to hold?
I do not have a crystal ball. And be advised; no one does. All I can do is look at my indicators and give an educated expectation of what the market might do based on the indicators as a whole.
Let me say this about next week. Did you see our sentiment survey? It shifted bullish quite a bit. That looks at least somewhat bearish to my eye. However, I do not make decisions based on one indicator, or even five indicators. The market is too complex and no one system can work well consistently because the market likes to throw curve balls. And those curve balls are the reason why I never marry my position or outlook.
As for next week, if you're bearish you still need to exercise caution. I do not think the bull is ready to roll over, though some profit taking is certainly not out of the question. In fact, my analysis seems to indicate that this bull could surprise the bears for a while longer yet.