Are We Out of the Woods Yet?

• Posted by Greg Harmon
• on January 22nd, 2016

As you can see, even Taylor Swift has had a rough few weeks with this market. Last night she asked me, “Are we out of the woods yet?
Are we out of the woods yet?
Are we out of the woods yet?
Are we out of the woods?”

 

I told her to take it easy. There are some positive signals but we are not out of the woods yet. Here is why.

The chart above of the SPDR S&P 500 Trust ($SPY) may have made a double bottom earlier this week. but to be certain we will likely need to wait several weeks to tell. In the meantime the SPY remains in bearish territory. Short term The momentum indicators are starting to turn. The RSI has leveled and the MACD is slowing its decent. But more importantly The price itself is showing signs of a short term turn.

It takes a short term turn to make a long term double bottom. The Hammer candle Wednesday was confirmed higher Thursday. Price now sits at the upper limit of a falling wedge and a break of that would signal more upside, possibly over 190. A start but not the full story. It will take a move over 195.40 to gain some traction, and then over 201 to solidify just a return to consolidation. Just you Taylor, crawling out of the woods, it will be a slow process waiting for confirmation, if it comes.

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