SPY Ing Above The Treetops
Dragonfly Capital | Oct 29, 2014 08:02AM ET
The major stock market indexes have been in a strong recovery since the mid October low. This is quite constructive. Tuesday morning in this space I gave some perspective as to why the markets were not yet ‘out of the woods ‘ despite the move higher. There were some sign s that a recovery was well under way but also some weakness that remained. Tuesday erased most of that doubt.
The chart of the S&P 500 above gives those signals. The RSI is less than a lob wedge away from a move back into the bullish zone over 60 with a rising MACD. The price has moved back over the 50 day SMA as well. Even the Bollinger bands are starting to open higher to allow some further upside. But the way it did it, with a bullish Marubozu candle, shows strength and continuation higher. The Marubozu starts at the low and works higher all day, continued buying all day long.
Many technicians will look for a new high to confirm the move, and that would certainly be welcome. But the move back over the 50 day SMA with a Marubozu gives a lot of confidence that the short term scare lower is over. It may be just peeking into the treetops, but the picture looks positive.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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