Today the market rallied massively and made a Major Accumulation Day. Major indices went up more than 2%, financials went up by 3.56%, SPX is approaching the previous high at 1101.36. The ratio between advanced volume and declined volume in NYSE was 18.24, which is the highest in recent four months. Personally I think the trend over all time frames of the market is back to up again. In the last week, there were two major distribution days and it seemed that a down leg had started, but today’s strong rally should have negated this – especially if we see another major accumulation day in the short term.
US dollar index – daily
US dollar is turning down again, now it’s at the lowest point since last September. Looking at the trend in gold, they are very consistent. Therefore I think this downtrend will not change in the short or intermediate term. Crude oil is trading in a consolidation range but there is no sign of major pullback at the moment. Consequently I don’t think the broad market is or will have a down leg very soon.
XLF hourly
XLF seems back to uptrend today after resolving from the symmetric triangle pattern. It is now approaching to the breakdown level at ~14.85 and may very likely go above it shortly. However the massively resistance at 15.4 still looks quite strong.
Over the short term, some technical indicators on intraday charts are overbought or will be so if the market goes up again. The volume in recent weeks were declining, which is also a bearish sign. A pullback around this level will be necessary and healthy, and it will not be an evidence of hypothesis down leg.
Summary of market outlook: market is bullish, and the trend is still up over all time frames. However, there may be risk of possible pullback in the short term.
