The Euro/Yen of late has held at falling channel support and looks to be breaking higher from a bullish falling wedge pattern. This leading equity indicator is suggesting, that in the short-term, stock prices should move higher.
Speaking of game changers…Mr. Market frequently changes directions with the least amount of investors on board. In the chart below “bullish sentiment” has dropped to the lowest levels since March of 2009. Last week I came across numerous articles with a similiar theme…How low the markets are headed! I believe this economy has challenges, yet when the competition becomes who can predict the lowest number, frequently, short-term surprises are in store.
This past week the “Ground Hog Day” posting highlighted the trading ranges of the 500, Nasdaq 100, and Russell 2000, with the following directions….”bring stops down right now to protect profits” and that inverse “head and shoulders” patterns could be at hand.
With the Euro/Yen upside “Pattern Breakout” taking place, the 500 index at the bottom of its trading range and bullish sentiment at the lowest levels since March of 2009; the ingredients are there for an upside move in prices that most likely would catch many by surprise.