While many trader’s use indicators, we should never ignore the plain price bars along with the question “what is the story price is telling”? And the story it spins is always right there, we often just look past it.
So right now on the daily we see a gap higher in SPX on June 23 after CPI and a big trend day up candle. The next few days it consolidates that gain, without retracing very much. How much power do the bears appear to have in this scenario …. it doesn’t take much experience to state the obvious answer “not very much”. This is the period that I recommended several stocks, based on the market finally getting out of the sideways range, and market players starting to look for fresh participants…. which is exactly what happened.
Next we see an acceleration to the upside as the pace of the advance quickens. People are now willing to buy at increasingly higher prices with some urgency. This smacks of bears getting squeezed and throwing in the towel, as well as those who start to believe “the market will never go down again”. Of course those two things happen near some sort of top.
The last three days have been down. However we have a very strong preponderance of red candles on the hourly chart, to the extent that it’s likely a relief rally is in store Thursday or Friday. If the bears have any real ammo, I don’t think we will see it till next week.