Breakout is the Word for the Day

Everyone had an opinion about what the Fed was going to do yesterday. Now, everyone is going to have an opinion about what the huge rate cut is going to mean to the market.

We will let the charts speak for themselves. Here's a weekly view of the S&P ETF SPY.



Note that the heavy sell off this summer was quickly contained; just as it was last February (the large down draft on the left of the chart. The price then formed a base of support for several months and now yesterday broke out big time.

This indicates to us that we are on the verge of a very big move higher. Add to that the fact that market sentiment levels, as of last week, were printing bearishness that hadn't been seen since the market bottom in 2002.

Unless the market spends the rest of the week selling off and the SPY closes back below its breakout point on Friday, we offer that we are looking at the beginning of a significant market move.

Given the shot in the arm the Fed gave the economy yesterday, we doubt it is going to whipsaw lower here. At least one would hope.