Very interesting chart. Markets tend not to form V bottoms, but at least W bottoms. As I wrote a few days, ago it looked as the S&P 500 (as represented by the SPY) was forming a left-leaning W with a slighter higher second low, and over the next few days, it formed a triangle with lows and highs bouncing around within a declining range. As of this morning, it broke out to the upside (bullish) on a gap (bullish) and rallied to middle of its 20-day range (bullish). End of month seasonality helps also. Relief that the Hurricane Irene damage was not as great as initially feared may help, but more likely is the much-needed distraction over the debt hysteria. Any hurricane-related rebuilding will probably stimulate the economy net-net, putting some Americans at the margin back to work and allowing the government to provide de facto stimulus spending (something the Tea Party has made taboo for some reason).
Bottom line: although it's not an official buy signal, for traders willing to take a quick, short loss if wrong, it might be a good time to go long, keeping stops tight.
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