Odds Favor an Upside Breakout

Includes: DIA, QQQ, SPY
by: Jeff Pierce

I’m thinking that today is going to see a resolve to the last three weeks of churning and here’s why. My timing signal is on the verge of flipping back to the bullish side, however there are a number of conflicting signals that are making this market very difficult to read. I originally thought the Egyptian Crises would be the catalyst for the markets to pause, and my signal backed up that thesis, but after Tuesday’s rally it’s difficult to see that happening now. We still haven’t made a new high on the Nasdaq, but after a solid consolidation day yesterday, it’s easy to see this breaking out, especially with the number of bullish charts out there. Below are a few that I really like:

  • Oil and Gas: Baker Hughs (NYSE:BHI), Whiting Petroleum (NYSE:WLL), Suncor (NYSE:SU), Denbury Resources (NYSE:DNR), Gran Tierra Energy (NYSEMKT:GTE), FMC Technologies (NYSE:FTO), Oasis Petrolium (NYSE:OAS), Holly Corp. (HOC), Western Refining (NYSE:WNR)
  • Uranium: Cameco (NYSE:CCJ), Uranium Energy Corp. (NYSEMKT:UEC)

Another reason that I think today will be significant is whatever the real reason for Tuesday’s advance, I think for the markets to maintain that momentum it must follow through relatively quickly. What better way than to break out to the upside forcing those short (like myself) to cover and add fuel to an increasingly bullish crowd. Mine is an EOD signal, so I’ll most likely wait until after the close to cover my market ETF’s.

I have noted the lines in the sand to watch, but with the strength off the 15 min chart, the recent accumulation days on the Nasdaq, and the overall strength of the Dow…everything looks good for the bulls to run further.

click on charts to enlarge

Could the transport derail the Dow’s breakout?

Disclosure: No positions