Rally Comes With Reasons for Concern

The rally we had been anticipating in the last two weeks has developed well. On the first chart below, I indicated with horizontal lines in past weeks the likely resistance and support to be watching. 

The strong advance was particularly impressive yesterday. But it did take the S&P right to the first of those resistance levels, where the advance appeared to stall. It left behind an unusually large gap, which takes on the appearance of an exhaustion gap, coming after a big advance and with such a small trading range for the day. I would like to believe it is just a pause and that we will go higher, but I am bothered not only by the nature of the gap but also by the fact that it looks so much like the March 1 up-thrust that looked at the time like the end of the advance, and makes me think it may again be a turning point. So, on longs, stops should be snugged in close. ...219 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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