Bullish Action

Overall, the lack of downside follow-through today together with continuing positive reaction to tech earnings raises the likelihood of a contination of the rally with a possible breakout in the Qs tomorrow. It is possible that the Qs are working on a more complex flat correction that would lead to another downmove next week to retest the April 20 low, but I expect that the Qs will move on to 35.70 and 37.66 over the next few weeks.

To reiterate, the risk is to the upside until sentiment swings solidly to the bullish side, which it has yet to do. Rarely does CNBC offer insightful information for traders, but one report today was very insightful. The results of analysis by a firm, I missed the name, showed that retail traders have been sitting on the sidelines during the rally, hedgefunds have been selling this rally agressively, and institutions have been buying this rally. This fits exactly with the analysis by Alex Roslin at COTs Timer, which has showed the large speculators to be very bearish on this rally.

This rally has a long way to go, I believe, and will be fueled by the hedge funds reversing their positions and retail traders jumping on board. In fact, we may soon see a third of a third wave breakout in wave (A) of Primary wave 2 up. If this happens, we would expect wave (A) to top somtime in July. I will make an effort to provide a labelled chart soon.