04/16/2010

(This is an excerpt from Friday's blog for Decision Point subscribers.)

STOCKS: Based upon a 3/1/2010 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 8/11/2009.

On Wednesday the S&P 500 broke up and out of the short-term ascending wedge pattern on expanding volume. On Thursday there was a small follow through advance on expanding volume, but short-term internals showed weakness, and it looked to me as if a pullback toward the point of breakout was likely. Instead, the breakout was a fakeout, and prices fell through support all the way back to the short-term rising trend line. At this point no damage has been done to the technical picture on the daily chart.

I do have concerns when I look at the weekly chart. Prices are at the top of an ascending wedge formation, and a correction back to the rising trend line seems the most likely next move. Could be that today's decline was the beginning of that correction.

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Technical analysis is a windsock, not a crystal ball.

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BIO: Carl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of DecisionPoint.com, a premier technical analysis website specializing in stock market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association.