After Monday's big move with surprisingly little volume, it appeared that the market would once again turn tail at important resistance.. and that was the case in early trading Tuesday morning following a run up in oil and some poor earnings results. However, by the end of the day, with oil prices retreating, we were looking at a nice little confirmation move in the S&P above key levels.
Yesterday, the S&P became the first major index to clear important resistance of the 200 day moving average AND the downward trend line with volume higher than the day before. It's not a blow out bullish move and much work is left in the Dow (which sits right at resistance of the downward trend line) and Nasdaq (not even close to first major resistance of downward trend line), but it's another step in the right direction. Keep an eye out for new leaders in emerging industries. Certainly, those small banks can't be ignored and oil stocks made a big move today as oil companies begin to report big profits once again this quarter.
Note the formation of the W shaped double bottom bases in the charts below. I would have liked to see both the Dow and S&P under cutting the first leg down, which would increase the likelihood that we have put in a bottom. Also note that with today's move, the S&P has a new support level at the downward trend line around 1260. Let's see if the Dow can follow the S&P lead on Wednesday and clear that downward trend line: