SPY ETF Breaks Out from Downward Trending Channel

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Today was a significant day on two fronts.  For starters we did see the SPY ETF break upward and through the down trending channel that I was talking about yesterday.  Secondly, we had volume come in a bit stronger on this move of 210 million shares.  Certainly not blockbuster volume, but we will take what we can get during these slow summer months.

So the market has elected to give a positive indication here instead of continuing the bearish down trending channel trend I was talking about before.  I really thought we would more likely trade sideways for a day or two the rest of this week before a break out attempt would occur.  Well that proved to be incorrect advice.

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Interesting that the breakout occurred on the THIRD attempt.  Often times you will see breakouts occur on the third attempt.  I cannot tell you exactly why, but I can tell you that I have seen it enough times to know that it is what the market likes to do.  The great trader Tim Ord is the one that taught me that.

What Does the Market Have in Store for us Next?

Well now we find ourselves almost exactly right at the resistance level of the first horizontal channel that started from early May 2009.  This is still a significant resistance area regardless of the fact that we broke out north today from the down trending channel.  There was a gap up opening today if my chart data is correct so I would not be surprised to see a test of that opening gap the rest of this week and that opening gap may serve as short term support.

That opening gap will also be useful for short term analysis when we compare how volume pushes into that gap.

So what can I conclude right about now?

I can conclude that we have some initial bullish tendencies and the market is telling us or at least hinting to us that it wants to get a move going north.  This is very significant especially in light of the fact that we have NOT even had a 38.2 percent Fibonacci retracement since the early March 2009 lows.  We almost did a .382 but not quite.  So the market is telling us something. It is telling us that it has internal strength for a move higher, perhaps a dramatic move higher.  This is consistent with my longer term forecast that we are not suffering a 1929 type bear market, but instead a mid 1970’s style massive rebound inflationary market.

US Dollar Gets Clobbered

Is it any surprise that the US dollar index got slammed today? No! Of course not… This appears to be official policy now.  The US dollar gets crushed and the market booms higher.  So the market’s bullish moves appear prosperous, but it is under disguise and Trojan horse of a collapsing inflationary dollar.  That is the order of business these days, nothing we can do to stop it. I better stop now before this turns into a Glenn Beck style rant.

Ok I think I summed up the critical points for today.

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