I know it is not the end of the month yet when we usually look at the monthly charts, but the last two weeks have been remarkable in my experience in trading the markets. I have posted a monthly chart of the cash S&P 500 index. All I can say is WOW!
This monthly chart goes back about 20 years. Since 2000 when we made a then all-time high of 1552.87, we have been trading in a large, decade-long trading range. I think the trading during the last two weeks has decisively broken up and through that trading range.
Although we can still get a top reversal and UpThrust the 2000 — 2007 highs, I see that as having very low odds. The strong move up so far this month after two months trading above the resistance level speak strongly bullish, to me.
Oil & What to Look for Next
Part of this bullishness is certainly due to the Fed pumping huge money into the markets. But I also see the so-called ‘shale oil revolution’ changing the fundamental dynamics of the market. The US is no longer dependent on the Middle East for energy. We are expected to become a net exporter of oil in the near future. The cost of energy is expected to drop substantially from today’s prices. That can only be bullish for the US stock market. Click this link if you aren’t familiar with the topic: US Shale Oil Revolution.
So the charts and the fundamentals are in alignment. We will, of course, watch the next pullback carefully. We want to see confirmation of the bullishness via low volume and narrow spreads. (After all, we are Wyckoff traders, not fundamentalists). If we get that no supply pullback, then we have clear air overhead.
Free Webinar This Tuesday (May 21)
On Tuesday at 4:30 ET, we will be holding a free webinar. This one is a little different. We will go through several markets where you decide whether it is a good buy spot, a place to sell, or a spot to stand aside and wait for further developments. I think you will not only enjoy it, but learn quite a bit about reading the charts. Come join us by registering below. We will send out a set of charts that we will be using in the webinar. I look forward to seeing you Tuesday!