The bull market - called in these reports in May 2009 - continues, with the Dow Jones Industrial Average rising to 11118, up from 10829 in my last report four weeks ago. Likewise, the FTSE 100 has risen to 5675, up from 5592.
Neither market shows any sign of a reversal, nor are they overbought, having made small corrections recently which has brought the 7 day RSI back to neutral levels on both indices. Both are very close to the upper boundaries of their multi-month trading ranges. I'll come back to this observation in a moment, but first let me remind you of what I said in my last report:
"The index that looks like it could be the first [to break out] is the DAX which is only about 2% from the upper boundary. This resistance level has been in force for most of this year, so breaking it would be a highly significant development which should see that market move substantially higher. If one major index manages to break out, then almost certainly the rest will follow"
At the time, the DAX was at 6211, and the upper boundary of the range, i.e. resistance level, was at 6350. About a week after I wrote the above, the DAX broke through, and has since moved higher almost in a straight line to 6601.
My forecast that this would be the first major index to break out of its range proved right on the money. We now need to see if the second part proves correct - that it will act as a precursor for the other indices. The way it looks at the moment, it's just a matter of time. If I'm right, this will mark the start of the second stage of the bull market. To put things in context in terms of where we are in the bull market, I'll borrow a quote from Churchill;
"This is not the end, it is not even the beginning of the end, but it is the end of the beginning."
Away from the stockmarkets, there are very interesting developments on the Point & Figure charts of £/$ and E/$. Sterling has a classic shuffle pattern (taught in my Point & Figure MasterClass course) and the Euro is on the verge of completing a congestion area. Both are continuation patterns which should see further advances for…
