Short-term bullish, long-term cautious

Mid-week market update: There are a number of signs that the pullback that began in late August has run its course. These conditions makes me short-term bullish, but I remain longer term cautious on equities.

The market's recent action of a correction to test its breakout level turned support is constructive. The index pulled back to form a bull flag, which is a bullish continuation pattern. It staged an upside breakout out of the flag this week, which suggests that the index may be poised for a test of its previous highs.

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