With last week's bounce still in effect I took a look at the bullish percents to gauge how long this may run. It was a bit of a mixed bag. While all three key bullish percent indices generated bullish signals, only the S&P breached declining resistance, as defined by closing price, to suggest it is a true bull rally. It could change today - although results from American Express (AXP) won't help, even if oil trades around $132 a barrel. The Dow finished the day bang on resistance. Will it pullback like the Nasdaq did yesterday? The S&P cleared the sharper of two resistance levels. A slower resistance line lurks some 60 points above: However, it is interesting to see the Russell 2000 continue to map out a bottom similar to how it did in March: Today's action may give more significant clues, even if there is a bit of trader's exhaustion out there following last week's capitulation. Look for prices to drift lower but hold last week's lows. Get the Fallond

The birth of Isabel, child numero 2, kept me offline last week. Lots of catch up for my blog here and on Zignals . I'll start with a Stockcharts review as it's a good quick way to get a grasp of the general opinion out there. Maurice opens the week up - go read his piece on Samson the Bull (the hairy, 4-legged kind). Take home message of his tale: Bulls may get some scraps and bruises when you are blocking their path, but if you are in their way you will be stomped on by the stampede. Maurice goes on: You bears had better take heed to the message that the market is sending. The technical situation has greatly improved and on July 17 the buy signal was given. But if you bears are going to run in front of the bulls, you are going to get trampled. Not only has the technical situation greatly improved, but market breadth is now in favor of the bulls. The McClellan Oscillator is momentum indicator, and is explained in detail in John Murphy's (the founder of stockcharts.com) won

Another down week, another down set of Stockcharters? Just as a heads up - I used to have a top-15 Stockchart list, but it has now drifted into the quagmire of the 'long-tail'. I maintain the front-page daily and anything from page 5 is current stocks. Maurice Walker kicks the week off. I was interested to read his opinions on the ADX with respect to volatility: The VIX had a spike to 30 today which is encouraging, but when buyers bought the sell-off the VIX closed right at the 2007 broken trendline. The VXN got a spike high to 35 which is extreme territory, just as 30 is for the VIX. We continue to get whipsaws and extreme volatility. As I stated yesterday the ADX is above both DI lines on the S&P 500 and the DJIA. Until the ADX peaks, the volatility will continue. However, buyers are coming in on steep sell-offs, which leads me to believe that the MACD on the averages will soon get a bullish cross. The daily index charts continue to have rising slopes on their histogram

My latest investment strategy finally reports profits when commissions are factored. -eom- Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Hello - I'm a new reader to your blog. I am trying my best to increase my understanding of the markets, and I'm curious if you can point me in the right direction. I've seen all kinds of graphs and charts on yours and other blogs (like this for example), but I have no idea as to how to read or interpret it. Is there a book, or series of books, that I can pick up that might help? Thanks for your time! Wade Welcome aboard Wade! If you are looking for reading material, the best place to start (I think) is with John Murphy's " Technical Analysis of the Financial Markets ". I found it an easier read than Pring's " Technical Analysis Explained ". The MTA (Market Technicians Association) have recommended Edward and Magee's " Technical Analysis of Stock Trends ", but I don't own a copy I can't comment on it. The latter book is the most expensive at over $60, Pring's is cheapest with a listed price of $35 with Murphy coming

Market set for a higher open following Dow Chemical's shopping trip ? What the market needs is some traction in the financials backed up with some speculative toe-dipping in tech and small caps. Maybe the feelgood factor will help the indices press their advantage . I am reading Richard Lehman's stockchart list for a guide on what it means for the various downtrend channels in play. So much for the bounce. At least those who follow the magic knew that there was a big line above the Dow and sure enough it repelled the index three times! Also, I got the blue minichannel up early in the day and when it broke (the Dow was down about 80 points by then) at least we knew to pull the plug. One thing about watching these minis is they get you out quickly on market turns you may not have expected. Anyway, we are left with some false breakouts on indexes like the SPX, so now we'll need a day or so to figure out where the current channels really are on the short term charts. (Likely i

Given the extent of the declines I would be surprised if we saw a "V"-reversal from here, but a small handle which held the bulk of yesterday's gains would be very bullish indeed (or a small rise - then a handle). Shorts were likely responsible for most of the buying/covering action. Large one day gains like Tuesdays' after an extensive decline, the Russell 2000 is a good example, is more bearish than bullish. However, Tuesdays' action is a good start, defining the lows as a basis for a bottom on which future risk can be calculated. Tuesday's lows are now a buying point for sideline money waiting to get in. Shorts will be wary of entering a new positions unless there is a decisive break of its low. Together there is a psychological advantage for bulls. The Russell 2000 fell just shy of a bearish " Three Line Strike ", but the suggestion is there. On the positive side, note the resemblance of the March bottom to the one developing now. The eventual