The broad US stockmarket actually looks better overall than it has done for several years, which may come as a surprise considering it has been in a bullmarket since as far back as early 2009. On the 10-year chart for the S&P500 index we can see that a potential top area developed from early 2015 through the middle of this year, which has now been aborted by recent gains that have seen it break clear above resistance at earlier highs. This index remains within the big parallel channel that started to form back in 2010 – 2011 and appears to have its sights set on a run to the upper boundary of the channel again, which will result in BIG gains from the current level. Whilst we can speculate about the fundamental reason or reasons for such a move – a Trump spending spree, hot money flowing out of embattled Europe and possibly the Mid-East and Japan into the US, and helicopter money, such pondering is largely a waste of time – the chart says the market is set to advance and quite a lot, and that’s what matters. This is a big change from several months back or even several weeks back, when it looked toppy and vulnerable.
The 4-year chart enables us to see how the market gradually rounded over beneath a giant Dome pattern, but then broke clear above it in the Spring of this year. Observe how, after this happened, and it advanced away from the Dome, it then dropped right back to test support at the Dome boundary before advancing again. This was a very deceptive move, given that it looked like it had topped out at the resistance at the highs, and thus was a buying opportunity that many missed out on. Like Russian dolls, a Dome pattern of lesser magnitude then formed during this year, which involved the market breaking out to new highs in the Summer before this Dome boundary forced it back down again, but Trump’s unexpected victory caused this Dome to abort too, and after its recent sharp advance the market is now “in the clear”, having risen well above the considerable zone of congestion approaching the 2015 highs.