based upon recent trading actions, Monday’s bullish breakout could be a beginning of a new up-leg that points to a test of the 1250 level on the S&P 500 index.

bulls continue to buy the dips and provide demand for stocks. This is good and should, theoretically, provide foundation for further advance. Traders however, should be aware that momentum is waning – Money Flow measure has been diverging from price action over the past couple of months, warning that the rally is now getting long in the tooth – so higher prices could be considered as good selling opportunity.

Capital Essence’s “ETFs Trading Map” for October 19, 2009: “…Major Sector ETFs: with the exception of telecom (IYZ), all of the major sectors are at or near overbought territories. Energy and Consumer Staples (XLE and XLP) are most overbought so we should expect at least a …” Subscribers, please login to read more.

Capital Essence’s CEM News - Market Outlook (the technical analysis of financial markets) for October 1, 2009: “…USO rebounded nicely off support at the lower border of the three-month triangle. Money Flow measure, which has been has been negative since mid September, is close to turning positive. This is encouraging and raised the odds for a test of…” Subscribers, please login to read the rest.

the S&P 500 index is short-term oversold after Thursday’s massive selloff so we should expect at least an attempt to rally over the next couple of days