The stock market’s bullish confirmation

All three major stock market indexes gapped up last Friday and continued up on Monday and Tuesday. This pushed them past their previous high of June 19 and 20. The low on June 25 was significantly higher than the previous low on June 4. Higher highs and higher lows is a strongly bullish sign.

Does this mean one should jump into the market now? No. This short term bullish trend (since the June 4 low) has moved the stock indexes to very near the top of their bullish trend channel. Profitable buys occur near the bottom of this channel. One can also view this recent pattern as a trading range that started with the bearish climax on June 4. That makes the top of the trading range the June 11 high. If the stock markets’ move past this point is here to stay, a weak drop back to or near this point is likely. If this occurs it would provide another entry point.

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