This is very bullish.
As noted earlier this week, bears are looking to fade the breakout attempt because they believe that a double top is forming. The problem with this strategy is that double tops are very rare and betting on one offers one of the lowest probabilities offered in the market.
Right now the recovery from August lows looks too sharp. As Einstein reminded us, however, everything is relative. It may be a sharp recovery when considered from a smaller time frame. And, were we not in a bull market it would make good sense to argue that prices are destined to return to their mean.
But we are in a bull market. In September 2006 the SPY was set up exactly like it is now. Then, as we suggest will happen now, no double top was to be had. Prices did not regress to their mean, but the bull trend had its way and bears betting on downside contributed to the rally as they were forced to cover at higher prices.
Recent price action would suggest we will see the same thing occur this year.
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