Important Day Today

Scans revealed strength in some areas of the semiconductor sector and in airlines. Momentum from yesterday appears to have some legs, but the proof is in the pudding and today comes the real test. If we get a strong market close today it will mean that we have a weekly technical breakout across many sectors and should project much higher prices to come. If the market stalls out here, it may mean some tough days ahead over the next week or two. Commentators are getting fairly bearish at this point and are suspicious of this latest move. We admittedly have been hesitant this week as well. However, taking a look at the weekly index charts a strong technical pattern is setting itself up on all three major indices. The S&P has broken out of a triangle, the Dow is pulling up strongly off of support, and the NASDAQ is showing nice follow through from the neckline break on the cup and handle, or head and shoulders pattern. Indicators on all three indices are strong here as well. So, while the daily charts are overbought, the weekly charts are far from it. Overbought conditions can persist during a strong trend and we may very well be at the beginning of a strong trend. Again, today is important as it will determine the weekly close levels.