In a Tuesday blog post I offered up the following:
While the trading off of the December 24th low has indeed been bullish (late intraday buying, rallying amid bad news, strong breadth, etc.), I want our clients to understand (if not expect) that a testing of that Christmas Eve low remains a distinct possibility. Although, again, the action of late has been encouraging...
Should the bulls succeed 2600, 2630 (where the next resistance line meets the 50-day moving average [green line]) will be the next big test.Well, when the headline stating that the U.S. is considering lightening up on tariffs on Chinese imports hit, the market immediately screamed higher.
Here's today's one-minute S&P 500 chart; spike circled in red:
And while the followup headline that walked back the good trade news resulted in a retracing of most of that surge, the S&P still managed to meander its way to a close just above those two areas of resistance I referred to on Tuesday (here's that one-year daily chart updated to today):
That -- a close above a level that virtually every technical analyst sees as stiff resistance -- is unequivocally bullish.
Now, of course that doesn't mean it'll hold, and that the market won't come crashing back through that 2,600-to-2630 range on its way to testing that Christmas Eve low -- which makes historical sense when you look at similar corrections past -- but, again, it's a bullish development nonetheless.
At the end of the day, or at the end of the rally if you will, I suspect it'll take more good news on trade, and of course a sooner-than-later end to the government shutdown to keep the market from painfully retesting that December 24th level. It could happen...