
Looking at the S&P 500 chart below, you can see that the Dubai selloff is practically invisible within the context of the trading range of the last several weeks.

Let's look at the chart again. What I see is a flag pole (the rally from the November low) and flag (the recent three-week consolidation).
The technical expectation from this formation is an upside breakout with an initial target of about 1180. We are in a bull market with the market behaving extremely well, so I have high confidence in this outlook. If prices drop below the bottom of the flag, breakout expectations would be negated.
Next is a monthly chart of the S&P 500, and it contains some very bullish evidence. The monthly PMO (Price Momentum Oscillator) is rising off a very oversold reading (lowest since 1932), and it has crossed up through its 10-month moving average. There are only four other deeply oversold PMO bottoms since then, and all were associated with new bull markets. Four data points in 90 years is a thoroughly inadequate statistical base from which to draw conclusions, but, understanding how the PMO works, I think the bull market is likely to continue for at least a year and could easily challenge previous all-time highs. Be advised, however, the positive long-term picture does not eliminate the possibility of substantial corrections along the way, but a smoothly rising monthly PMO presents a solidly positive long-term technical picture.
Bottom Line

Bottom Line

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