The following is an excerpt from the most recent edition of our Off the Charts newsletter:
It was tough to see this one coming.
After reversing to finish on the lows Wednesday, SPY gapped up Thursday morning.
And following a small, quick pullback, it took off running higher straight through into the afternoon.
It reclaimed the 20 day sma (234.71) — barely even pausing — and continued up above the 50 day sma (235.46). It settled into a relatively tight range above the 50 day sma for most of the afternoon but dropped right before the bell to finish a few cents underneath it. The move as on above average volume.
So a week of bearish action was wiped out in one face-ripping rally.
Reclaiming the moving averages was a big positive for the bulls.
If they hang on or start to push higher, SPY looks like it could be set up for a more substantial run towards new all-time high.
Finishing flat/green today would confirm today’s move and technically remove most of the short-term resistance on the chart.