I am switching to a BOT Long Signal now on the sp500 at a level of 1194. It is still 2 hours before the close but this is looking like we are going to get a close above the recent range I alluded to yesterday. I also indicated that the most important indicator we need to follow now is price itself. It really is the best leading indicator.
I think it significant that the first two days of trading in November have hardly shown any retracement once again, similar to the start of the October 2010 candle. It is saying that we still have a very strong and persistent up trend with little willingness to create a retracement into the previous month’s price candlestick.
The tape action of the last few months is fitting quite well into the pattern of the 1975 time frame when an enormous recovery rally occurred after the market had done a similar 38.2% fibonacci retracement from a previous initial multi month recovery surge.
If the DJIA and sp500 are able to exceed their April 2010 highs then I am looking for a further surge higher perhaps into the end of year 2010.
On the daily chart we would be showing a confirmed MACD histogram buy signal if on Wednesday of this week we get a close above today’s high price. The weekly and monthly trend still looks quite positive.
The dollar index appears to be following ‘plan B’ instead of ‘plan A’. The recent consolidation in the dollar index seems to be more of a rising wedge or bear flag that simply marked a pause in a steep down trend. Initially I thought the dollar would get much more of a bounce and cause the stock market to correct more significantly. But now it looks like a continued ‘drip lower’ is in the cards. This would seem to support the case of continued rising commodities prices and stock prices (inflationary trend).