That changed yesterday when the IWMs and SPYs broke through resistance on decent volume.
Now we have another confirming signal: the transports are also moving higher.
On the five year chart, notice the transports dropped through support at the end of last year and really started to fall during the first part of this year. This development was a chief reason why I wrote the Is a Bear Market Developing series at the end of last year.
On the yearly chart, notice the Transports formed a reverse head and shoulder formation during the sell-off, which they have now rallied through. Also note that over the last few days the Transports have risen back above the 5-year trend line which the index broke in its late 2007 sell-off.
On the daily chart notice the following:
-- Prices are above the SMAs
-- The short SMAs are above the longer SMAs
-- Prices have broken through the 200 day SMA
-- The three shorter SMAs are moving higher
-- The three shorter SMAs have moved through the 200 day SMA
Afraid to Trade has been all over this development.
