Last Friday's price action looked pretty dire. A follow through to the downside would have completed a head and shoulders top of the intermediate trend. But there were a couple of clues on the Chaikin Analytics Platform that suggested it wasn't time for "look out below". First, take look at Money Flow on the SPY as of last Friday's close.
The preponderance of green is a possible clue that institutions have been using the pullback to accumulate stock. Our next clue lies in the Power Bars
The ratio of bullish to bearish stocks in the SPY, along with the number of sectors which have mildly to strongly bullish ratios suggest to me that we could see another run up to 2100. Since the Power Gauge is 85% fundamentally weighted, Power Bars can serve as a warning sign if the breadth of bullish fundamentals start to narrow. Now, the ratio is not nearly as strong as it was during the rally of the February bottom and economic indicators, such as jobless claims, will be watched very closely. We'll need a stream of good data to bust through overhead resistance. But, with today's market bounce, I will be looking for Very Bullish stocks in the strongest industry groups to replace portfolio positions that have stopped out in the last 3 weeks.
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