Another new leg up to above the all-time highs of 2134 for the SP500

Since the last post where I was expecting an important medium term bottom, the SP500 has since rallied 16%. I did commented in March 23rd to anticipate a 3 to 5% pullback... that didn't happen until a month later. So now that a 3% correction has occurred the market condition is setup now for another new leg higher. Looking for a rally to new all-time highs in the coming months.

At extreme medium term oversold, expecting this week is THE bottom.

From last post, the SP500 dropped another 5% before hitting 'A' bottom. But the rally up was only back to the level when I wrote the post. The global fears of the oil plunge and of the China slowdown sent the global stock markets in heavy selling since the beginning of the year. Looking at charts of the major indexes and technical indicators, there are hints of a bullish double bottom patterns developing and positive divergences. I believe 'THE' bottom is in this week for the global stock markets or at least a 10% rally from here.

Global fears pulls the stock market down to medium term oversold

From the last post, the set up was to look for one more move down before reaching an important bottom and rally to new highs. That didn't happen as fears of a China slowdown, plunge in oil prices, and the Middle East crisis have the global stock market selling sharply down. The move down has been much more than anticipated and is much concern than before about the health on the long term bull market. Looking at the first chart below the SP500 is now closing in on its fall season lows. As at the fall season lows, the stock market is at medium term oversold and I am anticipated at least so sort of +5% rally to occur soon.

The above chart I have label three lows for the SP500 with the current low at label #3. At the bottom chart below is the SP500 back in the year 2011. As the charts below illustrate, there is some similarity between the price patterns. I anticipate the labels 1, 2, and 3 on both charts is hinting to me that the SP500 is currently setting up to rally higher in the coming months.