Equities Heading Higher Now!?

In my macro reviews the past two weekends (11/12/2010 and 11/20/2010) I have noted a cautious optimism for equities. The longer timeframe charts have remained positive but the daily charts have shown more negative aspects. That is until recently. Look at the charts of the SPY, IWM and QQQQ below.

SPY

IWM

QQQQ

All three show that the Relative Strength Index (RSI) has held near 50 and is rising, and the Moving Average Convergence Divergence (MACD) indicator is steadily becoming less negative. Also last Wednesday all 3 gapped higher and are back at or above those levels after testing lower. Yesterday IWM and QQQQ printed bullish candles after testing lower. Today the IWM and SPY printed almost perfect bullish Marubozu candles, where there is no lower or upper shadow. This price action implies a steady move higher right from the open to the close. The QQQQ did not print a Marubozu but had almost no lower shadow and a very small upper shadow, still very bullish. They all also gapped up this morning. The price action today put the IWM well above its 20 day SMA, the QQQQ above its 20SMA by more than half of the daily candle and the SPY just above its 20SMA. All are also now in the top half of the Bollinger bands. Finally, the closing levels are for each are above the closing levels prior to the pre-election gap ups. There are a lot of short term bullish sign emerging now.

Of course it could all go crashing down on Friday, but these signs are something to take note of.

Trade’m well.

(As always you can see details of these individual charts and more on my twitter feed and on chartly.)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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