Sulaman Chaudhry and Andy Cole send: As many of you may know, we have been very bearish on the market for some time. However, based upon last weeks action, we believe we may be in for a more substantial rally here:

As long as we remain within the channel, the bullish sentiment will probably continue.

The refiners are beginning to show some signs of life here. After breaking out of a descending wedge, Valero (VLO) could move higher. The 200 day isn’t all that far away.

Tesoro (TSO) is also looking bullish.

The leading catalyst for our most recent change in market tone has to be Wells Fargo’s (WFC) earnings beat that they posted last week. The stock had a great pennant breakout on heavy volume and looks as though it could move higher. Let’s not get ahead of ourselves though: what happens when you throw hundreds of billions of taxpayer dollars at “too big to fail banks,” then proceed to lower interest rates and completely change the accounting rules in the process? Presto! You get a surprise earnings beat. Eventually this run on the banks will come to a miserable end, but we’ll take it while it lasts.

Gold (ETF ticker: GLD) has been trading in a downtrending channel for the past few months now. As long as the market continues to rally, Gold will probably stay within this channel.

However, that inverse head and shoulders is still in play for now. Let’s wait and see if that right shoulder continues to form over these next few weeks.

Good luck.