The stalemate on the SPY broke down at the open, but then proceeded to trade higher throughout the day, keeping prices well within the current trading range.
Even so, we are much more bullish on the market's outlook following yesterday's action for two reasons. First, as already mentioned, the market refused to break down when it had a valid reason to do so. Second, a large number of stocks are behaving quite bullishly. Most are inflationary stocks, like oil and metals, but good behavior is good behavior and it's something that we haven't seen for quite a few months now.
This doesn't mean go out and buy everything in sight. Rather, be choosy and carefully buy pullbacks in the strongest sectors, including metals, Ag, oil exploration and a handful of other sectors that are working in this environment.
Later today, if we get the chance, we will highlight one or two strong sectors here in this blog.
Outlook:
The current outlook now depends on the direction the continuation triangle pattern breaks. If it breaks to the upside, then we expect prices to rally into the falling 50-week average for a high probability shorting opportunity. If prices break lower, prices may retest January lows for a high probability buying opportunity.
1 comment:
Now it's refusing to go up. Tough market.
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