Near Term Bullish Breakout

Yesterday the market surprised a lot of people as the S&P 500 broke out to multi year highs and the Nasdaq bounced firmly off support. This is a pattern we have been watching develop for some time on the weekly charts. This is why we have hesitated to sell short when daily charts were at their ugliest. It looks like this move to the upside is the real deal and should continue for at least the next few weeks. We should be able to pull some decent gains out of this move. That said, caution still needs to be exercized here. We need to watch for breadth as the market moves higher. Bears are making the argument that the market is in the process of creating a topping pattern and they cite an inverted yeild curve as the primary reason. We believe that this move is tradable, but it is also a good idea to be critical of the move being ready to switch alegences to the short side if sentiment becomes overly bullish.