S&P 500
Dow Jones continues its bullish price action. It recently started what appears to be an ascending triangle and prepares another assault at the horizontal base. As a sidenote, during an ascending triangle’s formation, the price pressures the horizontal base until it manages to get through. A retest of the base is not mandatory, although it happens often.
The US stock market continues to be in a win-win situation, just like before the elections at the start of November. This time, it is not the stimulus but the relief from more than positive results on the COVID-19 vaccine front.
Yesterday’s retail sales in the United States showed the shape of the consumer. This is an important economic indicator because it tells us much about the savings rate if it declines or not, what is the level of confidence in the economic recovery, etc.
As it turned out, retail sales continued to rise in the United States, although at a slower pace. While it is the smallest increase since the recovery took off in May, it nevertheless represents a continuing, rising trend.
Consumers were reluctant to spend during the pandemic and still are. However, the positive vaccine news may be just the trigger the consumer needed ahead of the winter shopping season.
The measured move of an ascending triangle equals its longest segment. When projected from the horizontal base, the outcome represents the minimum distance that the market should travel. What traders do by the time the price reaches the measured move is to raise the stop to break-even and then trail it by the time the market advances.
As such, bulls may want to buy a break of a new all-time high and wait for the measured move. By the time it comes, they may book some profits and raise the stop at break-even for the rest before trailing it further.
