S&P's, Spiders, and QQQQ's

Here is a daily chart of the Spiders (multiply by 10 to get the cash S&P). I last commented on this market here.

Contrary to my expectation the market broke above its early August rally top on the Fed's announcement of a 50 basis point rate cut (which was more than the market had expected). I think this is a very bullish development and it means that the next significant reaction will unfold only after the market has rallied near to its July top at 156. In the meantime support is at the 149.50 level.

The second chart above this post shows the daily count of the number of issues on the New York Stock Exchange which advance in price together with its 5 day moving average (pink line). I last commented on this indicator here.

As you can see today's daily number is very high and breaks the pattern of lower tops for the daily readings. The 5 day moving average has turned up after dropping close to its moderately oversold level. I think this action is a short term negation of the bearish divergence I discussed yesterday. We shall have to wait and see if these numbers continue to improve as the market rallies towards its July top.

I remain very bullish on the market's prospects for the rest of the year and expect to see new bull market highs by a substantial margin during the next three months.