SP500 finely balanced - but leaning to the upside.

I believe that most the time markets are finely balanced, the price at any one time relative to an earlier period reflects the various arguments for and against a higher or lower price, be they Technical Arguments (which in my opinion are a graphical depiction of the overall market psychologically), or Fundamental Arguments. - That is not to say that I believe the price is necessarily right at anyone time, but rather that it could go either way, depending on whether the bullish of bearish factors win in the short-term, eventually though it will move to the right price level, though when that occurs and how that occurs is a path unknown, indeed even the idea of a correct price level is itself a subjective argument. - But as the great investor and trader Benjamin Graham once said "In the short run, the market is a voting machine, but in the long run it is a weighing machine." 

- In recent weeks I have espoused various Technical Arguments in favour of the Bull Case, along with some contra arguments which could argue in favour of the bear case. Last week was an interesting week, after an initial break up through key resistance, the bear case appeared to re-assert itself with a number of potential warning signals causing concern, however this turned around sharply on Friday posting a strong bullish move on decent volume which took the SP500 back towards the high of the week, indeed Friday may well have been a key day. - I will re-iterate the 5-day Candle Pattern formed over the course of the week, which I mentioned on the afternoon update on Friday, it is a pattern known as a 'Rising 3 Methods' pattern, this is a continuation pattern, an example of this is shown below:

The above pattern is a short-term pattern, and as with all short-term patterns follow through is required as confirmation, without this the pattern could be null and void. In the meantime the SP500 is very close to significant resistance at 1050. I have 4 different signals acting as Resistance here at 1150 on the Daily SP500. The chart below shows three of these. 1) The Horizontal Line drawn from the Jan 2010 highs. 2) The Mid Line on the Andrews Pitchfork. 3) The top of the Rising Channel which has largely contained price action over the past 5 months, and which is projected from resistance and support form 2009.  The Fourth resistance level is the 2/3rd retracement of the decline from April to the June low, which also occurs at 1050.

However, what is also crucial is that last week saw a break up over the neckline of the Inverted Head + Shoulder continuation pattern, which can not be seen in anything other than a Bullish light. 

One of the markets giving me concern last week was the Bank Index, this has been the laggard market in recent weeks. Friday however it made a decent bounce off support, keeping a large Rising Wedge pattern (A potentially Bullish Formation) as a remote possibility. Note I had said on Friday that the top line of this had been busted, however this appear not to have been the case (See chart below showing the BKX ETF).

I will re-iterate the various Bullish and Bearish arguments in greater detail in tomorrow's post. I hope today's post is not too confusing, in summary I think the odds are increasingly favour the Bullish side, though the Bearish arguments still weighs on this.