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Market Looks More Bullish But..

|Includes: DIA, EEM, QQQ, SPDR S&P 500 Trust ETF (SPY)

Last Friday the S&P 500 finally took out resistance at 1260 and closed over its 200 day moving average.

The Dow Jones Industrials broke out from a reverse head and shoulders pattern and closed over resistance at 12.250.

The market looks more bullish, with a couple of higher lows since the October bottom and is now offering some setups in leading stocks that want to breakout higher. 

We still have some positive seasonality left which is also bullish.

However, we still need a high volume-conviction breakout in the S&P 500 and other indices to confirm that a new uptrend has begun. We have been here before in October, November and in early December only to fail and pullback from these levels.

Also most of the world's markets are still trending down or sideways. 

The Market Monitor has 30 Components (ETF´s) that in my view represent the world's economy from a "bullish" point of view.  The more of them going up, the stronger the world economy and the stronger the trend and breadth of the markets.

Of all the assets that compose the market monitor only 3 of them (10%) are trading over their 200 day moving average and only barely so (DIA, SPY, USO).

The rest of the markets are trading, in most cases, below their 200-150-50 day moving averages so a new global market uptrend is still far from being confirmed and we will probably roll down lower again if things in Europe get nasty.

If a new "bull market" is starting, the beginning stages will be choppy as most world indexes have a lot of resistance to challenge and stiff sellers will surely appear at these levels.

Gven the current conditions I think trading break outs will still remain challenging (most have failed since July or so) and buying pullbacks on quality stocks will be the best trade.

From a Macro point of view, the US economy seems to be improving after a couple of bad quarters but the European situation still far from being "fixed" so expect headline risk to remain high and markets still sensitive to the developments of the old continent.

Best regards,

                    Victor Riesco