Stock Market Commentary: Another Gain - Another Accumulation Day

Since the indices made their brief trip below 50-day MAs in early July it has been up, up and away. Last week's 'shooting stars' looked liked the end had finally come but yesterday saw many of the indices challenge those days highs and consign the traditional bearish candlestick line to history. Volume also rose in line with an accumulation day - not bad for a lazy month of summer.

There was some room for caution with relative strength from tech shifting back to 'safe' large caps; a rotation of money out of tech into large cap stocks. However, there was a larger discrepancy between tech and small caps, a more bullish rotation of money.

As for breadth; the July dip turned out to be a bear trap but it will run out of steam sooner rather than later.

It's too early to call the March low as the end of the cyclical bear market. But each push away from March low increases the chance for the March low to be the low of the cylical bear once its course is complete (likely the latter part of 2010).

Reason for optimism but no reason to overpay.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

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