So ALL the major indexes are under pressure based on the Fed's comments less than two weeks ago. The news that there may be tapering in the amount of bond purchasing has woken up the bears and has caused some fear in both the US, Global, and World Markets. However, if we take a look at the charts over the last 6 months, we'll see the first leg (ie. A), second leg (ie. B), and formation of the third leg of a bull pennant. A bull pennant is developed when you have two intersecting lines coming at two different angles forming an intersection of which the underlying line (ie. support) surpasses the overlaying line (ie. resistance) forming the pennant flag. The SPY also had resistance at 160 which it broke out and that now provides a reference point to be future support. I believe the SPY will retest the 160 support line in the coming weeks as the pennant flag completes formation.
I believe the markets will continue to propel forward as the so called tapering will not occur. The recent economic data has been very week leaving the Fed no choice to continue their bond purchasing as they continue to try and spur the economy.
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