From Charts Gone Wild Blog Sent in by Shaza

Key Psychological Shifts Forming the Foundation for this Rally

On September 13th’s Chartly TV show, I noted key differences in the late August bottom vs. all other bottoms inside the intermediate-term range as well as it’s similarities with the March 2009 bottom. I also noted my bullish case for the REIT industry and how they were ‘stable longs’.
On my September 14th Charts Gone Wild Stocktwits TV, I reiterated these differences and maintained a cautious bullish stance I also established a 50%+ long allocation with no short exposure.
Starting early last week, Charts Gone Wild premium subs and I have been positioned with multiple REITs and a 30% $SPY long position (currently still over 50% long with zero shorts). I said that I liked the REITs and I put my money where my mouth was. Yesterday, the $IYR broke to a brand new 52-week high, carry holdings higher such as EQR, SPG, and AIV (Disclosure: Positions in all three). It was one of the best days we’ve had in all of September.
I briefly explained the psychological shift that occurred from the beginning of September till now. It’s obvious that the magnitude of this move was not anticipated and that many traders were either caught short, or allocated too heavily in cash and ‘missed’ the rally. For me, however, there were a few characteristics that I noticed (remember, I mentioned this a week prior to yesterday’s move) and I’ll attempt to explain it all in detail here:
1) Comparing the late August bottom to other range-bound bottoms – Take a look at the chart below.
For all of John Lee's analysis and charts go to his blog