As millions of investors ran for cover over the past two weeks the market came roaring back this week, breaking through the 1380 resistance level and is approaching the 1410 resistance level. Take a look!
I think this was a great rally for the bulls. However, with the fiscal cliff uncertainties still looming at the end of the year and the technical indicators I would be cautious on buying into this rally. Take a look at this 60 minute chart (gives a short term view of the stock market). The RSI (relative strength index) is over extended and the selling volume pressure was almost two times greater than the buying volume of the rally. Take a look.
In my opinion I still think the market is due for a turn lower but as experience has humbled me I could easily be wrong. In order for this rally to be valid and here to stay we will need to see the S&P 500 close above 1410 this week in order to break the trend line.
Here’s to our Wealth!