In our previous blog from 9/9/2013, we showed the SPY's breakout from a several week, tight trading pattern. For the last several weeks, the SPY has been very volatile.
In the graph below, we can see that since 8/8/13:
1) the SPY broke its long-term trendline (top green line)
2) the SPY gapped down twice (orange circles),
3) it bounced off of the 100-day EMA and turned up (inflection point) on 8/28/13,
4) the SPY then broke above its 50-day EMA and closed both gaps,
5) it has held above both gaps (above 168.6) for 4 days now (purple rectangle).
From here, of course, the SPY could challenge (and hopefully surpass) its all-time high at 171.1 or it could fall back significantly. I'm glad that we have MIPS to detect and tell us what we should do (see the MIPS Market Strength Indicator below).
The MIPS Market Strength Indicator (MSI) has improved significantly in September. See graph below: