Swing Trading Strategies & Stock Picks Since 2003

How’s this for a headline:  All Four Major US Equity Indexes have now Broken Above Key Resistance via their 50 day EMAs… at least intraday.  Let’s take a quick look and then wait for a fuller assessment after today’s close.

S&P 500 Daily Chart:

Again, fuller analysis will come after the close but you need to be aware of this development as it’s occurring.

Price has pierced the flattening 50 day EMA on an intraday basis which could lead to a major move in the market if shorts are forced to cover soon.

The 20 day EMA is now rising and has curved to the upside.  The momentum oscillator has been forming a positive momentum divergence underneath price since the November lows, which really is only good for a stronger than normal expected retracement, but often divergences can precede pure price reversals.

The new highs - as many are saying - are occurring on lower volume, but remember we’re still slightly in “holiday volume.”

Keep in mind there’s a so-called “January Effect” which tends to give a boost to the first few days of the year (and last few days of the old year) in addition to a potentially late “Santa Claus Rally.”

What’s going to be important to watch is if this run above resistance is only good to take out the short-sellers’s stop-loss orders (in which price could reverse sharply back down) or if there’s some real strength behind this rally, particularly if we can make a new momentum high (above indicator value 25).

Bulls are ’squeezing’ the Bears at this point - let’s see how much force they have and watch what happens next very closely.