After doing my weekend research and charting I noticed a theme in the markets and that it that there are a lot of very bullish setups in various stocks and sectors. Cup and handles galore. Breakouts. Flags. You name it. And as a result I think this market is headed much higher. The strong close on the weekly timeframe last week made me more bullish of this market than I had been. How much higher will we go?
Well, looking at the chart of the SPX you can see that we are nudging up against the 61.8% retracement of the selloff since last September. This level is at 1036 and if we broke out above that I think lots of traders would start to realize that you cannot be expecting the market to fall because if something retraces more than 61.8% of a prior move, then odds say that the current move is for real and generally has more legs. With that said I believe we can see 1111 in the SPX in the next few months. In the Dow this would be about 10,300. Get ready, its coming.
As for the present, we are entering the typical doldrums of late August when anyone who is anyone is usually at the beach or something to that effect. The volume is low and the volatility is even lower. So I can't see too much happening here between now and Labor Day but the market is making new highs so that should be taken into account. We could easily just chop around for a few weeks here and then see the real breakout in early Sept.
Longs>>> EMC, ABT, UNP, TSO, PTEN, OIH, FCX, KLAC, PNC, NRG
Shorts>>> CMED, MTZ, FDO