Why I feel a continued bounce will favor the SPY/DIA

Lately, over the last year or so, one of the most important concepts giving us a high probability reversal has been that of the false breakout/breakdown. The reasons for this are many, but to name a few, 1) they provide extra trading profits for Wall Street as traders who buy the false breakouts are not only buying at a high price which when the breakout fails will cause them to sell and add more momentum to the downside break, but 2) they are also allowing Wall Street to accumulate a short position right out in the open at high volume (usually Wall Street is quiet about accumulation and distribution so they aren't front run by traders and other firms). However when buyers buy on a breakout, there's usually good volume, Wall Street is on the other side of the trade, meaning they can sell short on heavy volume and not raise suspicions. The false move is still one of our best timing indications.

Here's why I feel continued upside over the next few days will tend to favor the Dow and S&P (DIA/SPY)

 First, sector rotation today favors the Dow especially, but also the S&P and is fading n the Q's Note Tech is sliding, but the important groups for the Dow are gaining, Energy, Basic Materials and more then anything, Industrials. As for the S&P-fnancials have about 22% weight and are important for the SPY as well as energy.

 The SPY has two prospective breakout points at each of the trendlines, those breakouts haven't happened, but would be an excellent timing indicator so long as 3C counts them as false breakouts which would be highly likely.

 The DIA is within range of a false breakout, but hasn't made it yet. This would be an excellent signal, especially if all3 majors ht FB's at the same time roughly.

 The Q's can come out of rotation a bit as they HAVE made the breakout. The Q's would likely see further buying if the SPY/DIA made advances just because the market tends to move together, albeit at different rates of change.

 Furthermore, the DIA produced a positive divergence on the open today.

 However, don't let short term charts fool you, the hourly chart is solidly negative, this is why I try to distinguish between a tactical move and a more important strategic move, the strategic outlook for the DIA (and the broad market for that matter) is VERY poor.

 Note Q's did make a breakout, note there was no positive divergence this morning.

 The SPY did, like the DIA, post a 10 min positive divergence on the open. This leads me to believe more attention in further upside, will be focussed on the DIA/SPY.

 Again, the strategic outlook for the SPY is VERY poor.

Here's another strategic outlook of the SPY, once again, VERY poor.