What's important on the 10 day chart is the triangle that formed at the end of last week and prices clear move through the triangle today in a very strong rally (see the next chart).
Prices opened higher, dropped and then move higher in a big way. Notice the three gaps as prices moved higher in the morning. Prices then used the 10 and 20 minute SMAs for technical support before a big buy at the end on heavy volume.
So -- why did the markets move higher today? According to the AP:
Investors are betting that strength in banks could juice the entire economy.Rising financial stocks propelled the stock market to its biggest one-day gain in six weeks Monday after an influential banking analyst raised her rating on Goldman Sachs Group Inc. The bank reports earnings on Tuesday.
Meredith Whitney said also on CNBC that hard-hit Bank of America Corp. is inexpensive given the assets on its books.
Her upbeat, albeit still cautious, tone on banks helped lift the Dow Jones industrial average 185 points in relatively thin trading volume. It was the best performance for the blue chips since June 1 and follows a month of often directionless trading in which investors looked for any fresh sign that the economy was improving, not simply licking its wounds.
Goldman has long been considered the strongest bank amid the economic downturn, but Bank of America has been one of the hardest hit by loan losses. Any improvement in banks' profits could shore up their financial position and free money for lending.
Investors latched on to Whitney's comments because she has for years offered one of the more pessimistic -- and accurate -- assessments of the banking business. While she remains cautious about the industry over all, the shift in tone gave the market a jolt.
However, also note the possibility of a bear trap is pretty high right now
