when the price action is tight.
With the NASDAQ Composite breaking out to a new 52-week high last week, our model for timing the market was forced back into “buy” mode. This is because it is impossible to have a “sell” signal in place when at least one of the main stock market indexes is setting higher highs and higher lows on the daily chart. The NASDAQ’s breakout to a fresh 52-week high is shown on the daily chart below:
Although the index has not yet rallied back to a new high, the S&P 500 has staged quite a comeback as well. As of Friday’s close, the S&P 500 SPDR ($SPY) is sitting only 1.2% below its 52-week high:
After a strong, six-month advance off the lows of 2012, iShares Spain ETF ($EWP) has been consolidating in a tight range just below its monthly downtrend line. Now, a potential long-term, bullish trend reversal is underway.
On the monthly chart of $EWP below, notice the international ETF is now trading above its downtrend line (dashed blue line) and is poised to breakout from a tight, eight month base of consolidation:
This article is brought to you courtesy of Morpheus Trading, LLC.