Thursday, February 20, 2014
Here are daily charts of my three favorite trend indicators. The S&P 500 and the New York Stock Exchange advance-decline line are both above their 50 day moving averages (green lines). The Dow took a peek above its 50 day moving average but fell back below it yesterday. Two of these three indicators are above their 50 day averages so the short term trend remains bullish.
The strength in the advance-decline line is associated with high reading in the daily advancing issues oscillators you will find on my chart page. The strength in these oscillators is strong evidence that this up trend has several more weeks to run. Strong trends like this one typically end with bearish oscillator divergences but these take several weeks to develop and are not at all in evidence now.
I think the S&P will rally above 1900 during the coming weeks and the Dow too will move about 5% above its current level to new bull market highs. Linday's three peaks and a domed house formation still fits the Dow's price action during the past few months. I think point 23, the top of the domed house occurred on December 31. But I also think that point 27 is likely to above point 23, not the typical pattern but still allowed by the rules.If this interpretation is correct then the current rally to point 27 will end the bull market which started in 2009.
You can see that all three indicators are still above their rising 200 day moving averages (red lines) showing that the current bull market is alive and well. It doesn't make sense to be long term bearish until two of these three indicators are visibly below their 200 day moving averages.