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Stocks: Bears hate this rally

Commentaries & Views

On June 27, we wrote that "a bounce in stocks is underway; this may be the one that tests the bears' conviction" and offered the below chart to show targets at the 50 and 200-day moving averages.

The first target was hit last week, and after a very brief consolidation, prices have again moved higher. Futures are pointing to a green open today; if bulls can maintain pressure, another wave of bears may be waiting to cover, perhaps fueling a rally comfortably past 4150 resistance (about where SP futures are trading now) up to the 200-day moving average.

The below is a repeat of the above chart with updated price action:

Bulls should be cautious as the medium-term trend is still pointing downward. However, should they convincingly take out 4150 and price consolidate above the 50dma before attacking the 200, the case for a new bull run becomes interesting.

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