Chartology: Get On Board the Love Train

From Barron's Getting Technical column:
Charts Say the Stock Rally Is for Real 
Technical indicators have not looked this good in a while, but Ben Bernanke and the Fed still control the market. 

Ever since the market started to move higher last November, technical indicators such as volume, momentum and market leadership seemed to be at odds with the rally. The stock market went up, and that was all that mattered.

Or was it? The Federal Reserve had a lot to do with it as the Fed continued to pump liquidity in to the system via its open-ended bond-buying program (called quantitative easing or QE). As long as the printing presses rolled, stocks went up.

So with the technicals going positive over the past few days as the May-June correction ended, we have a perverse reason to worry. Why now, after eight months of rallying? Could it be that the market has finally given in to the siren call of endless Fed stimulus? Does it believe that the last Fed campaign dubbed "QE to infinity" was named literally?

But let's get to the charts and the positive developments that have occurred since last Wednesday's column (see Getting Technical, "Up or Down? Decision Time for the Market," July 3).

The Standard & Poor's 500 index moved smartly above all of the resistance features outlined last week (see Chart). These include the falling trendline from the May peak, the 50-day moving average and the gap on the chart from the June 20 market slide. The index is also back above its former rising trendline drawn from the November low, so the June breakdown is now fully negated.

Chart Standard & Poor's 500

Market breadth, as measured by the New York Stock Exchange advance-decline line, a running tally of how many stocks go up and down each day, is also moving higher. So is the net number of 52-week highs. Indeed, both the full NYSE 52-week highs minus lows data and the common-stock only data, with bond equivalents and exchange-traded funds removed, are climbing once again....MORE

Here are the O'Jays.
We'll plan on playing their "(for the love of) Money" next week but if this doesn't work out we'll go to their "Back Stabber".