- Technical Commentary -

September 23, 2009 (FinancialWire) (By Dr. Joe Duarte) — The S&P SPDR ETF (NYSE: SPY) and the S&P 500 Index (SPX) got a nice boost on 9-22 as both made new highs from the March bottom. The question for investors is whether Monday’s pause was enough to launch another up leg in the stock market or whether the market will go into some kind of consolidation or correction.

If you look at the indicators that have been carrying the day for the rally, the answer seems to be that higher prices are coming. 

First, the NYSE and the Nasdaq advance decline lines made new highs with the S&P 500 on Tuesday. Second, the number of stocks making new 52-week highs on both exchanges also made new highs.  These are key measures of a market’s lifeblood, breadth and momentum. Positive breadth means that more stocks are moving higher in price than those falling. That means that investors have a better chance to find winners.  Momentum means that the overall direction of prices is decidedly in one direction. In this case, the direction is up.

The general trend of the market’s volume is also encouraging as volume on up days has generally been higher than volume on down days. That’s a sign that buyers are still in control. Tuesday’s volume on the NYSE was below average, but was still better than Monday’s volume.  Volume on the Nasdaq was more robust, another good sign.

What it amounts to is that buyers are still coming in on the dips. And as long as that’s the case and the other indicators mentioned above continue to confirm the bullish action, the up trend is intact.

[Go to http://www.financialwire.net/?s=joe+duarte to see more commentaries by Dr. Joe Duarte.]

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