Setting up the Mother of All Battles

I thought I would be a funny guy when selecting this image by continuing to use this overused phrase and jokingly calling folks attention to the upcoming TA that I see in the indexes. However, I then thought about our troops around the world keeping us safe over the holidays and will therefore tone things down a little out of respect - nothing compares to their sacrifice.


What I am talking about is something that I have been seeing for days, but didn't feel real confident in until I saw today's bounce right off the DJI trendline again this morning. Assuming that the "B" team can continue to keep things under control through Monday, the S&P and DJI indexes suggest a major push up (or down) next week.

The triangle patterns being set up by each index suggest that the move will be higher by a lot in the short term. The Nasdaq does not show the same pattern, which I would like to see, but it also just suggests that the sectors represented by the index are just rotating differently (the Nasdaq chart also looks OK and we bounced off the 20-ma today).

We are also seeing the same pattern in the XLF, suggesting to me that financials will participate in the short term rally as well. Here is the triangle pattern :

http://stockcharts.com/h-sc/ui?s=XLF&p=D&b=4&g=0&id=p27864979949&a=113339973

Now look at the DJI. It also confirms that 13,700 is a key area for break out:

http://stockcharts.com/h-sc/ui?s=$INDU&p=D&b=4&g=0&id=p31430554569&a=107565401

Finally, the S&P shows a similar pattern:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=4&g=0&id=p14473809506&a=116688257

This pattern could also fail, but when combined with the January effect, my money is on a short term burst up into the 3rd week of January when the meat of earnings hit.

By the way, I added to BTJ this morning at $37.00, bringing my average cost down.