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Monday, November 14, 2011

Mixed Bag, Advantage Bulls

Market signals are ambiguous at best right now, with a symmetrical triangle forming in a bull pennant context that presents the pattern most supportive of continuation higher. Add to that increasing numbers of breakouts in recent days and improved action in commodities, and the bulls have a respectable case to make for a push to new highs. It is well worth noting, in fact, that the $NDX has already come within a whisper of its 2011 peak, an unusual feat for a market preparing to roll over hard. That said, from a technical standpoint in many areas, charts and indicators have been clinging to a "no man's land," walking a fine line between bull and bearish scenarios.

As can be seen in the chart below, the $SPX is still probing the underside of the head and shoulders neckline that triggered the correction as well as the 200-day SMA. -- both formidable resistance hurdles that explain the battle for control taking place in the region. As price narrows towards the apex of the triangle, resolution should occur soon, hopefully providing more clarity as to near-term direction. As of now, indications favor the bulls, but it wouldn't take a whole lot to tilt the scales south.

Trade well.

-- Brinkley
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