With a somewhat blind-eye to the European debt crisis and some slightly encouraging job reports coming out, stocks managed a comeback after opening lower. The big news is that the Long-Term Trend Model generated a BUY signal for the SPX.
* * * * * * * * * * * * * * * * * * * * *
STOCKS: Based upon a 12/05/2011 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a BUY signal as of 1/5/2012, so our long-term posture is bullish.
Maybe this rally is really taking hold. The Long-Term Trend Model generated its BUY signal as the 50-EMA crossed above the 200-EMA. This officially puts the SPX in a long-term bull market. Also positive is the ultra-short-term positive trend channel that has formed in the thumbnail of the daily bar chart below.
Our Long-Term Trend Model BUY signal was also confirmed or reinforced as the 17-EMA crossed above the 43-EMA on the weekly chart. This chart doesn't finalize until after the close tomorrow, but this crossover will stand as long as price remains above the EMAs.
More positive news, short-term indicators turned up today and while some like the STVO below are now considered slightly overbought, all of them have room to move higher along with a rally.
Today we updated the AAII sentiment chart and more encouraging news is there too. Note the bull/bear ratio spike. When we've had similar high readings in the past few years, they have happened in the midst of or near the beginning of sustained rallies.
Bottom Line: Today we officially moved from a long-term bear market to a long-term bull market with the Long-Term Trend Model BUY signal. Short-term indicators have turned up and while some may be near overbought territory, all of them have room to rise higher before becoming dangerously overbought.
* * * * * * * * * * * * * * * * * * * * *
CRUDE OIL (USO): As of 10/27/2011 United States Oil Fund (USO) is on a Trend Model BUY signal.
USO tested support along the top of the triangle today. The PMO is still rising after its recent crossover despite a rough day; and while this was a successful test of support, my concern is that price is now getting close to resistance around 40-41. We can see that since May this price area has been holding up as strong horizontal resistance.
A look at the weekly USO chart illustrates the 40-41 resistance line even more clearly.
* * * * * * * * * * * * * * * * * * * * *
Technical analysis is a windsock, not a crystal ball.
* * * * * * * * * * * * * * * * * * * * *
