The last few days have seen a strong counter cyclical rally. Will it continue?

I like Point and Figure charts because they remove the element of time. As you can see, the last few movements in the market have been very bearish (lower highs and lower lows). If this rally (represented by the green “X”s can break out and form a new trend, then perhaps this rally will prove to be sustainable.

If, as is likely, the Europeans get hung up on their most recent efforts, the market is very likely to resume its downward trend.

The point and figure chart makes it very clear what the S&P500 has to achieve if it is going to get out of its recent bearish rut.

S&P 500 Point and Figure Chart
Source: Bloomberg

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