It's interesting to draw trend lines across various tops and bottoms. I have been charting the S&P vigorously and over the last 16 months the S&P has rallied on numerous occasions to take out bear market trend lines. One of the first to go was in mid July 2009 when the large inverted head and shoulders pattern (bottomed on 3/9/2009) broke out simultaneously over the iH&S neckline AND the trend line drawn across the peaks of May 2008 and August 2008.
Then in March of 2010 the trend line drawn from the peak of the bull market in 10/2007 and the peak in May 2008.
Now, if we draw a trend line from the top of the bull market in late 10/2007 and the more recent top in April of 2010 we see that the S&P closed just a HAIR over this trend line. I am charting using log charts but in this instance the arithmetic scale shows the exact same thing taking place.
Here is a link to my chart - http://www.freestockcharts.com?emailChartID=180f3f8d-446b-451a-ae8e-322d2bb4cbc0
Keep in mind that when trend lines that were resistance are broken they tend to turn into support and vice versa. The difficulty that the S&P had in breaking over 1150 will likely turn that level into strong support now that it has been taken out.
I believe that this is not a bear rally in a bear market. This is a bull market. It has a hallmark bottom pattern that signaled a major reversal (and the pattern took more than nine months to complete). The bear market lasted the normal duration of about 18 months from late October 2007 until early March 2009. The average bull market lasts about 3.5 years. If this one is average then we have two more years of gains in the markets to look forward to.
I did not always think this way. I was very bearish up until early April 2009 when I started to see evidence that a bottom had been put in. I became a bull on April 6, 2009 and nothing I have seen to date has been sufficient to turn me back into a bear.
I will try to figure out a good way to post charts in this blog but for right now I will use links to freestockcharts.com. You really need to see the details and charts posted in small windows tend to lose critical things of interest.
