Our market trend indicator for the S&P 500 turned to "Up" this week, putting all our trend indicators in agreement. Although the major indexes showed healthy gains for the week, as most companies continued to report higher earnings, shares slipped on Thursday and Friday on downbeat economic news.  Friday's job creation numbers showed the economy is slowly adding jobs, but not at a rate that is going to change consumer's sense that if we are not in a recession, it certainly feels like one. This has led to the Federal Reserve reporting that outstanding U.S. consumer credit shrank again in June, providing more evidence that consumers don't want to spend. GDP, of which consumer spending comprises two thirds, will likely continue to fall while this sentiment prevails.

Both the S&P 500 and NASDAQ Composite have broken out from a head and shoulders bottom (bullish) pattern and are now in an "ascending triangle" pattern (orange lines). The ascending triangle is not a pattern we have any data on but Bulkowski's Encyclopedia of Chart Patterns describes it as a bullish consolidation pattern with a high success rate once a breakout to the upside is confirmed.




In the case of the NASDAQ a breakout to the upside would be confirmed if the index overcomes resistance at 2341. For the S&P 500, a breakout would be confirmed if the index overcomes resistance at 1131.

In both cases, we would be more confident of the bullish trend in these charts if the upper bound of the triangle were flat. In both cases, a break below the ascending line of daily lows would be bearish.

The number of breakouts almost doubled last weeks count and comfortably outperformed the major indexes at week's end.

No new features this week.

This section will return at the end of August after the kids return to school.