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The back-and-forth price action over the past few weeks has seen stocks, sectors, and indices attempt to base out under menacing resistance trendlines on their respective daily charts. With today’s rally, those issues are threatening upside breakouts above those trendlines. As always, follow-through in the coming days is crucial to confirm these breakouts.
In quite a few instances, we are looking at upside breakouts from descending triangles. Generally speaking, descending triangles are considered to be a bearish continuation pattern. However, when they resolve to the upside it is usually a powerful move, with so many traders caught out of position–Either underinvested or short.
While a close near or at today’s highs is not necessary for the bull case, I believe a close above 1200 on the S&P 500 would be a psychological boost for the bulls after the past month of one disappointment after the next.
