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Stock Market Chart Patterns & Rally Sustainability

|Includes: SPDR S&P 500 Trust ETF (SPY)

I have written of my expectation of a rising stock market since my June 2 article.  I continue to hold this view.  One item that I have found particular noteworthy is what may be a large C&H (Cup & Handle) chart pattern, denoted by the bright green line at the 1220-level in the chart below.   While the price action may not exactly satisfy the requirements for  a classic C&H pattern, the behavior seems to.  As such, I view it as an important consideration, one that would seem to support further strong price appreciation, at least in the short-term:

(click on charts to enlarge images; charts courtesy of StockCharts, annotations by author)

While I have been expecting this stock market rally, that is not to say I think this advance is sustainable.  I continue to believe that we have been experiencing a strong "bear market rally" since the low of March 2009.  I have many reasons, both fundamental and technical in nature, for this belief.

This next chart shows (in blue) what may be a very large "bear flag" since the lows of March 2009.  While this chart pattern, like any other, is not "guaranteed" to have veracity, it nonetheless is something that I feel should be monitored:

While the stock market will likely advance strongly from here - at least in the short-term - I would guard against complacency.  My overall analysis indicates there are a lot of cautionary signs of current and impending financial market problems, some of which I recently commented upon in a market overview.  I plan on updating my views on these problems as warranted.

Disclosure: no positions in the S&P500