#MarketTiming – $SPY ready to break up out of its box?

All through the market’s recent wild ups and downs, short-term breadth, measured by the McClellan Oscillator, has continued to work its way higher with each market plunge and recovery.

Now the all-important long-term breadth has also turned positive.

This is very bullish.

And yet, price has to yet to break of its nearly two weeks of consolidation – see the box on the chart below. With today’s general-market surge it is once again challenging the top of its range and appears poised to break through to higher highs. Tomorrow could be key. If SPY breaks out, it will no doubt take the rest of the market with it. The first objective would be that red trend line across the tops of the recent pullback.

Whether this is a resumption of the bull market or just a short-term swing in a bear being born is still a question. If SPY fails to climb out of its box, it could go all way down again and possible turn that box into the bull’s coffin. There are plenty of doubts this bull can keep going but for now the fight is on the upside.

Those rising green circles, marking the lows above the lows on the upper graph below, are a telling prelude to a strong up swing (see their history on the chart) and right now the bulls have the benefit of the doubt.

It is time to be long to be long and to buy stocks on dips until it isn’t anymore.

(click on the chart for larger view)

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