Well, it seems that short-lived 4% correction is now over and stocks may resume an uptrend. What is very exciting here as this return to higher highs is happening is the S&P index is right near all-time highs. In fact, we see less than a 1% move up will accomplish that objective.
The indicators have been slowly turning to the bullish side of the ledger, breadth (not shown here) has been fantastic the last couple of weeks. An oscillator we use to measure breadth has turned bullish, as a matter of fact cumulative breadth has moved to an all-time high, which often leads to the indexes also making new highs. That is what has us excited about this latest move up, there is staying power.
Now, will this run look like the channel we have drawn from October to April? We don't know that yet, but certainly a change in trend from cautiously bullish (teal) to outright bullish (blue) is pleasing to the bulls.
The recent pullback felt as if the world was ending - doesn't it always feel that way? - but corrective moves are necessary to squeeze out the excesses. Mission accomplished!
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Note the strength in stochastics, which measures the momentum of the market. This indicator turned up last week and is now making a run at overbought. That could take a few days to happen, and with some positive news on the economy this week and more strong earnings, the market will hit its objective.