Market Review: Breakout Patterns On The SPY

I am all about finding interesting chart patterns  and  I pulled up a weekly chart of the SPY and out popped and interesting pattern the last couple of years.  I was noticing that the last two weeks on the SPY have been flat  after it made a  new 4 year high, and I began to notice in the last 3years before a run up the SPY has a pullback or pause and then breaks out and runs up.

As you can see on the chart below the last two correction have been followed by pullback which lead then to a new high on the SPY ETF.  It is certainly possible as we go into fall season that we could start to see the markets engine get turned on and make a very robust bull run as we saw at the end of 2010 and 2011.  This market pull back has not been as deep so it is very possible that there is less impediment to run, but also remember the market can change quickly.

For the near term the market seems to like the idea of QE3 and we hopefully will get more clarification on what the ECB is going to do to help endebted countries like Spain and through out Europe in the coming weeks.

Going back to what I said at the the beginning about patterns, this one is certainly in the mold of the last two dips and there are some possibilities on the horizon that could help push the market up..



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