[youtube:http://www.youtube.com/watch?v=Od9FkRvvnrg 450 300]r

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I am letting my full house position in $WYNN ride for now. Perhaps later today I will take off 1/4, but probably not much more than that. As you can see on the updated daily chart below, I believe today to be a significant breakout from the multi-month ascending triangle that the stock had formed. Ascending triangles are reliably bullish patterns, as a series of higher lows and congestion near resistance eventually resolves to the upside in the face of the bears being rendered impotent.

Note also the strong buying volume today, further confirming the big breakout. If you missed the move here, do not fret. I think you can look to initiate a long swing upon a light retrace to the $96-$97 area.

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Shorty, we’re going to China!

The high momentum China stocks are on fire this morning, namely ONP RINO HEAT CMFO CCME. Perhaps what is most bullish about the action in those names is that not they are merely bouncing from oversold conditions. Instead, they are breaking out of multi-week, or even multi-month, bases.

I am fully aware that the temptation here is to proclaim, “The high beta, small cap China names are running fast and furiously. Therefore, the market is topping out because of such complacency with respect to risk appetite.”

However, that type of mindset would have seen you shorting this market last week, when the cloud-computing and data storage names were cratering, yet the broad market was holding up sturdily. Remember, it is not always WHAT the market is doing, but HOW it is doing it. Thus, price action, volume, and general principles of technical analysis/mass psychology are going to trump old Wall Street axioms.

In the case of the momo China stocks, as seen in a few examples of their charts below, I believe these are bonafide breakouts, as opposed to one-day wonders. Again, these stocks are breaking above sound, healthy bases on strong buying volume. From my vantage point, that type of action does not signify the irrationally exuberant behavior by market participants that you would expect to see at a market top.

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[youtube:http://www.youtube.com/watch?v=gzLoSF95k4g 450 300]r

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[youtube:http://www.youtube.com/watch?v=4F9-7WLFHvc 450 300]r

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I will post more in-depth analysis over the weekend.

As usual, if the video screen is too small to watch here on iBC, you can simply double-click the screen and watch it on YouTube.

UPDATE: I got cut off in the last ten seconds of the video, but my point was that the market will give us signs and signals well in advance before we ever see a Prechter-style Dow 1,000 affair.

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[youtube:http://www.youtube.com/watch?v=7IMWw_XgR7Q 450 300]r

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The market is consolidating right at recent highs, as we speak. After yesterday’s shakeout, today the bears are the ones on the run. Unlike previous times when we have moved above 1160 on the S&P 500, there is no rush to hit the exits by the bulls. Disregard that fact at your own risk.

Below, a 5 minute updated chart of the S&P should illustrate the danger posed to shorts here. The high and tight consolidation indicates a high probability that market players believe that it is now acceptable for the market to be operating above 1160.

UPDATE: We are breaking out as I write this, as denoted on chart.

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