Thursday, June 10, 2010
I think today's rally has very bullish implications. It has broken the pattern of 35 point reactions established during the last six weeks. The market has moved higher, retracing all of yesterday's break, without any apparent reason. Against the backdrop provided by the very bearish attitude of the public towards stocks I think this action means the market is headed much higher from here.
On the five point box point and figure chart you see above I have counted across the very well defined base area that has formed during the past 4 days (horizontal green line). This count yields an upside target of 1140. Attaining the 1140 level would represent a breakout from the much bigger base (which "counts" to well above 1300) that began near the May 25 low. It would also carry the market well above the descending trend line I have drawn. Today's activity leads me to believe that a breakout from this "up to 1140" base is underway. Such a breakout means that much higher prices (to and above 1300) will be seen during the next six months.