The SPY tested and held above the 113 level on Tuesday before finishing near the highs of the day. The pattern of higher highs and higher lows is found just about every single timeframe and as long as that is the case the bulls obviously remain in control. The one concern (always has to be at least one) from a technical standpoint is the relative ease which stocks seem to be rallying. Not that I am complaining, but when the gains come quickly and anything with “China” or “Solar” in their names rallies the way so many of those issues have in the last few days it is often a sign that the speculative levels are a little too high and that usually precedes a correction. I remain loyal to the trend and always have an exit strategy to cut losses or lock in gains in this environment, that is the job of a trader.
Below is a clearer picture of the levels from 2008 which are now coming into focus, they should be viewed as reference points, not areas where the rally will end.