Stocks Are Bullish, But Be Aware Pullbacks

Stocks made some nice recovery for the last couple of months, which can be signal that bottom is in place, but before we will see more gains, be aware of corrective pullbacks.

Looking at the Dow Jones Futures chart with ticker DJIA, we can see sharp and impulsive bounce away from golden 61,8% Fibonacci support after a completed complex W-X-Y correction. With a huge volume increase and recovery back above channel resistance line, we can expect a bullish continuation, but ideally after some short-term corrective pullback.

DJIA Daily Chart by

The reason for a short-term pullback can be volatility index VIX, which is trading at the extreme optimism levels that can cause some fear, especially if we consider that SP500 is trading at yearly resistance.

VIX + SP500 Daily Chart

All that being said, seems like stocks are bullish, but be aware of a temporary, short-term to mid-term pullbacks before the uptrend resumes.

On the date of publication, Gregor Horvat did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.