Fundamental events, as indicated last week in my analysis, had the potential to drive the market bullishly to test the April highs and that is exactly what happened. We are slightly above resistance and I feel the next move is to retrace to test old resistance which has now become new support. If we bounce we could be on for a more sustained bullish run. If support doesn’t hold, we will move back into a channel and trade there for awhile. It is likely that the markets will languish a bit as the move on Thursday resulting from the QE2 announcement moved the indexes outside of the upper Bollinger Band. When that happens almost always price action slows or retraces. I feel that it is now more likely that we will get a bounce and move higher after a short term pullback to retest the aforementioned support.
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