I’ll admit I’m trying to find reasons to support my new bullish bias, and if I’m reaching here please let me know. But there are two things about this chart that strike me as mildly bullish even though my gut is telling me that we’ve rallied far enough now it’s time to plunge back into the abyss. I’m trying to be as objective as I can in this analysis.

  1. Volume was actually quite high this week, despitebeing a holiday when volume typically dries up. If you compare this 4 day rally to the last attempted advance at the end of October, you’ll clearly see that buyers came into the market with force. I do agree that we’re going to have to see more volume come in soon if this market is going to move any higher, but that will most likely occur next week when traders come back from stuffing their face with turkey.
  2. The McClellan Oscillator is layered behind the Dow showing the number of advancing issues less the number of declining issues. During the last rally I pointed this major overbought state out, calculating that the move up was just about over. However, this move up is still way below the last peak, indicating that there is more room to run.