Market Conditions - A Symmetrical Triangle Pattern

Today was a bullish day.

Now you might ask why was today a bullish day? The market closed down about 0.66%.

Here's why....


First, the market did not close more than 75% or 1 % down. I use this guide as a warning of real, true blue selling versus a buying opportunity. The drop was not great enough to make me want to run for the exits.

Second, the market leaped up in the final hour of the trading day. As a rule of thumb, the later in the day the rise the more bullish is the price action.

Third, the market on as daily chart is tracing out a Symmetrical Triangle Pattern. This pattern began on February 18, 2011 when the S&P 500 Index printed out a high of 1344 on Friday. The low was the violent drop to 1294 on Thursday, February 24. Since the February 24 low, the market has bounced up to 1332 and then down to 1302 and then back up to 1332 this morning before dropping down to 1311 and then closing up over 1320. What a bouncing ball! In fact, this bouncing pattern is creating a tighter and tighter coiled action. Eventually, price will burst up above 1332 and zoom higher or bust down through 1310 and drop lower. I would bet that we zoom higher next week because the Symmetrical Triangle Pattern is usually a continuation pattern and the market has been heading up since July 1, 2010.

So, my expectations are that the bounce in the last hour of the trading today is a harbinger of higher prices ahead next week.

Fourth, on a 60-minute chart, the price action momentum down has slowed up. The MACD Histogram is turning up. When the MACD Histogram turns up after a decline, it is a sign that higher prices are ahead.

Finally, the market closed above the 13-day moving average on the clearstation.com 9-month chart for the S&P 500 Index. This closing above the 13-day moving average is bullish, since the pros are acting in the final hour of the trading day.

For all of these reasons, today was a bullish day. I believe higher prices are ahead.

Have a good weekend!

Later.

P.S., the most important date this year will be May 18, 2011. I believe we have a fairly high probability of making a low for 2011 on May 18. So, I will continue to think about how we can game this date and, in the process, beat the S&P 500 Index for the year.

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