After auto rescue bill died on senate floor late Thursday night, Wall street shook off the bad news and stocks climbed higher Friday. As we discussed last Friday, this is a bullish sign for stock market, since bad news is not driving down the market anymore. With this kind of sentiment, market is most likely building a short term bottom at this level.
Chart below shows the weekly price movement of S&P 500 index. In May-June this year, the index fell below its 28 week moving average, its STO dipped below 75 and has remained below 50 since then. In July, the index try to rally but fail. Its STO climbed above 20 but ccould not get over 50 and the index failed to take itself above the 28 week moving average. Due to the market action in the past two weeks, the STO has climbed above 20 again. We will pay close attention to see if the index can keep its momentum this time and climb above 50 to uphold the up trend.
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